Monthly Financial Insights – October

Hello and thank you for watching this month’s Dechtman Wealth Management Financial Insights. In this month’s video, I’ll discuss some of the major headlines that influenced markets in October. I’ll also provide insight into what these developments could mean for you as an investor.

October is often a spooky time for the markets. Historically, it’s the most volatile month in the calendar year. Some of the largest crashes have occurred in October, too, including 1929 and 1987. The most significant sell-offs during the 2008 meltdown also happened in October. 1

This October’s results reflected the month’s rocky reputation. The S&P 500 declined 6.9%, posting its worst monthly showing since 2011. Similar struggles occurred in other domestic indexes and worldwide markets. The Dow gave slid 5.1% and the NASDAQ down 9.2% – its largest monthly decline in nearly a decade. 2 Plus, global equities had their worst monthly performance since 2012. 3 So, what happened last month to cause these declines? Seasonal volatility may partly be to blame. 4

The volatility started at the beginning of the month when Federal Reserve Chair Jerome Powell indicated that interest rates will continue to rise. 5 However, increasing rates were not the only concerns on investors’ minds in October. Ongoing trade tensions and questions about U.S. corporate profits also affected sentiment. 6

In particular, several major tech and internet companies experienced large price drops after releasing their earnings reports. 7 These stocks can attract investors who are chasing results, so both good and bad news can drive large swings in their prices. 8 Thanks to many companies’ positive earnings results, however, October ended with upward momentum. By the end of October, estimates indicated that S&P 500 companies grew 26.3% during the 3 rd quarter. In fact, investors started to buy back the tech stocks that sold earlier in the month, helping to erase at least some of the losses. What happens next?

Going into November, market fluctuations could continue for a while. Questions about interest rates and the global economy remain. The midterm elections could also affect investor behavior. 9

But, the economy seems to be moving forward. The Federal Reserve recently said we we’re in a “remarkably positive” moment. 10 Behind last month’s volatility, we also learned that the economy had solid growth in the 3 rd quarter, and the labor market remains strong. 11That’s all I have for you this month. Don’t forget to tune in next month by subscribing to our channel for another economic and educational update from Dechtman Wealth Management. And If you’d like to discuss your personal financial situation please give us a call today or visit our website using the link in the video description below.

  1. https://www.cnbc.com/2018/10/15/this-chart-shows-why-october-has-such-a-scary-reputation-on-wall-street.html
  2. https://www.reuters.com/article/us-usa-stocks/wall-st-ends-last-day-of-haunted-october-in-the-black-idUSKCN1N51NL
  3. https://www.bloomberg.com/news/articles/2018-10-31/asia-stocks-to-start-november-mixed-dollar-gains-markets-wrap?srnd=markets-vp
  4. https://www.marketwatch.com/story/its-the-crucial-wall-street-query-is-the-worst-over-for-the-stock-market-after-an-ugly-october-2018-10-31
  5. https://www.cnbc.com/2018/10/31/the-stock-market-lost-more-than-2-trillion-in-october.html
  6. https://www.reuters.com/article/us-usa-stocks/wall-st-ends-last-day-of-haunted-october-in-the-black-idUSKCN1N51NL
  7. https://www.cnbc.com/2018/10/31/the-stock-market-lost-more-than-2-trillion-in-october.html
  8. https://www.bloomberg.com/news/articles/2018-10-31/megacap-faangs-stage-rebound-that-fails-to-erase-october-s-slump?srnd=premium
  9. https://www.marketwatch.com/story/its-the-crucial-wall-street-query-is-the-worst-over-for-the-stock-market-after-an-ugly-october-2018-10-31
  10. https://www.washingtonpost.com/business/2018/10/02/this-is-almost-too-good-be-true-economy-fed-chair-says/?noredirect=on&utm_term=.b54d35a225fe
  11. https://www.ftportfolios.com/Commentary/EconomicResearch/2018/10/29/economy-rising
  12. https://www.reuters.com/article/us-usa-economy-unemployment/u-s-labor-market-tightening-manufacturing-slowing-idUSKCN1N64XA