• Fed Funds rate hiked to 3.75%, as expected
  • Job growth still strong-ish
  • Election results and CPI release could keep markets choppy                    

Markets rallied in October, with the Dow jumping nearly 14%1, on hopes the Federal Reserve would signal interest rate hikes were nearing an end. That seemed to be the case on Wednesday afternoon, with changes to the Fed Policy Statement signaling the pace of rate hikes could slow following the announced 75bps increase2. The Dow Jones Industrial Average was up 400 points point following the statement’s release3. However, Chairman Powell threw cold water on the idea of a near-term Fed pivot in his post-meeting press conference, saying it’s premature to be talking about pausing rate hikes4. Stocks then turned lower, with the Dow ending the day down 505 points5.

Friday proved almost as volatile, with the major stock averages all up more than 1.5% on Friday morning, falling back to near even, and then rallying Friday afternoon6. The employment report released on Friday showed the economy added 261,000 new jobs in October, slightly stronger than expected, but the smallest number we’ve seen on a monthly basis since late 20207. Weaker job numbers are, conversely, positive for the markets as they could show that the economy is slowing, and therefore the Fed’s rate-hiking cycle could be nearer its end than its beginning.

Third-quarter earnings season is winding down, but news that could affect the markets continues this week with nationwide elections taking place on Tuesday. Delayed results could lead to further volatility, but we strongly caution against making investment decisions based on the political winners or losers. A Forbes study earlier this year showed the best average stock market returns occurred during periods with a split Congress8. We’ll also get a new CPI reading Thursday. The consensus estimate is 8% inflation year over year9– still a long way from the Fed’s 2% target. We’ll also be looking at natural gas storage numbers10, which have helped gas prices come down in recent weeks, to see if those of us in the north will be socked with higher winter heating bills.

 

As always, thank you for your continued confidence in our team.

Asset Management Department

Sequoia Financial Group

 

 

The views expressed represent the opinion of Sequoia Financial Group. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While Sequoia believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and Sequoia’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. Past performance is not an indication of future results. Investment advisory services offered through Sequoia Financial Advisors, LLC, an SEC Registered Investment Advisor. Registration as an investment advisor does not imply a certain level of skill or training.