October Scare? | October 1, 2021

AUTHOR: Jason J. Roque, MS, CFP®, APMA®, AWMA®
TITLE:       Investment Adviser Rep – CCO
TAGS:   S&P 500, NASDAQ, Rates, Inflation

September turned out to be a volatile month after all. Should we expect a scare from October as well?


The S&P 500 started the week mildly lower, 0.27%. Core durable goods orders delivered less return than expected. It rose 0.2% in August where 0.8% was expected. The focus was more on the debate in Washington over the debt ceiling and the potential of a government shutdown.


Selling accelerated on Tuesday as the S&P 500 lost 2.04%. Long term interest rates climbed dramatically on the day as tighter monetary policy is expected in the future. The Federal Reserve Board (FRB) Chair, Powell, was testifying in Washington. Concerns that ’Transitory’ inflation, will not be so transitory, dominated rate activity.


Markets stabilized on Wednesday, but that is not necessarily good news. The S&P 500 rose 0.1%. It is important to observe investor activity the day following a large sell off. The lack of a bounce signals an acceptance of fair value for the losses of the previous day.


Selling pressure persisted on the last day of the month as the markets sold off an additional 1%. This gave us a negative month on the S&P 500 for the first time since January. In case you forgot, we had Game Stop to thank for January… You take that out of the equation, and this is the first down month since October of last year.


New month, new you??? Markets welcomed the 4th quarter, as the S&P 500 rose 1.15% to end the week and say goodbye to September. The Government averted a shutdown on Thursday night lending to the upbeat tone of investors. To be clear, the debt ceiling still needs attention over the next few weeks.


What a September it was, as the S&P 500 lost 4.75%! A market correction is marked by a fall of 10% or greater. Look for volatility to continue in October as the debt ceiling situation remains unresolved. Also, we are building to what should be an FRB tapering program in November. That will be just in time for the consumer to save the economy with holiday shopping…

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