October 2023 Market Review & Commentary
I am happy to report that we made it home safely from our Vermont/Maine excursion earlier last month. We have made this trip for almost 9 straight years and this year was the first time in which the New England weather did not welcome us with open arms. The rainy overcast skies did limit our views, but it did not dampen our time together as a family. We will simply have to be looking forward to next year in hopes of better weather.
On a more important subject beyond our vacation time, I would like to send out the largest possible “Thank you”, to all the men & women who have served our great country! Our debt to you & your family is immense. Happy Veteran’s Day!
October Market Review:
As I mentioned in last month’s market review, everyone (investors & the market) was extremely excited to turn the page to October, unfortunately like the weather in New England, a warm welcome was not present.
Just like August and September, October markets seemed to continue to wrestle with external data driven challenges. Almost every new data point during the month of October created a ponderance of what might be the direction from here. This ponderance was clearly seen in the quarterly earnings calls as reporting companies did not struggle with profits but struggled to meet future guidance expectations. With 78% of the reporting companies showing strong growth, the pause comes in the fact that their guidance forward was much more reserved than expected.
This hesitation in upside future guidance certainly could come from the recent turbulent events in the Middle East, the slightly higher than anticipated inflation data (+0.04 in September), a looming potential government shutdown and what might be the Federal Reserve’s next move. If all these areas are not enough to make you ponder, we still have the backdrop of what “real” effects will the last 15 months of rate increases have on the economy. As I have said since March of 2020, we are certainly living in interesting economic times and remember that lower future guidance does create an opportunity for potential upside surprises.
For the month of October, we saw the S&P 500 finish down -2.20% and the DOW shed another -1.36%. Even with this being the third straight disappointing month, this has not derailed the year as S&P 500 is still carrying a year-to-date return of +9.23% and this has finally pushed the DOW into negative territory for the year to -0.27%. The sectors that created the largest drag on the overall markets during the month were Energy (-5.75%), Health Care (-3.26%) and Consumer Discretionary (-5.52%) while the only sectors to post positive returns were Technology (+0.05%) and Utilities (+1.29%). Technology continues show signs of a defensive position as it has all year.