This week in the markets
- The month of October has been a volatile one, with mostly downward swings in the market. We wanted to revisit some of the highlights.
- The last two days of October ended with an increase in most major US stock market indexes; however, those same indexes were down overall for the month.
- Wages and salaries had their biggest jumps in a decade -- good for your wallet but potentially bad for inflation.
Market recap: What the heck happened in October?
In case you aren’t tired of the Halloween wordplay, here’s one more for you: It’s been a fright-filled October for investors, indeed. (Ok, we’re done.) Many factors caused heightened anxiety and sell-offs this past month, including fears of waning economic growth, trade wars, and steadily increasing interest rates. Here’s a recap of some of the dizzying market swings:
October opened with an increase in bond yields, which may have contributed to a sell-off in US stocks. Remember, as bond yields increase, stock prices tend to decrease.
The Dow Jones Industrial Average (DJIA) plunged 1,400 points over two days in mid-October, possibly due to fears of the Federal Reserve raising interest rates, which tends to slow economic growth. As interest rates increase, consumers often borrow and spend less (because it costs more to do so). The release of minutes from the Fed’s September meeting, which indicated the Fed would continue to increase rates, helped keep the downward momentum going.
Last week, investors got some temporary relief from stock market declines, as the market rebounded slightly, possibly due to positive earnings reports from big names like Microsoft, Visa, and Comcast. However, the relief was short-lived, as the week ended with another decrease in most major US stock indexes.
October ended on a positive note
The last two days of October, however, were more upbeat for investors, with the Standard and Poor’s 500 index (S&P 500) up 1.08%, the DJIA rising .97%, and the Nasdaq increasing 2.01% at Wednesday’s close. The release of a positive quarterly earnings report from Facebook on Tuesday, October 30th and news of a strong private-sector labor market, which reported 227,000 new jobs on Wednesday, have helped improve investor sentiment. You could say that investors got a little Halloween treat. (Ok, now I’m really done. ☺️)
Staying focused on your long-term goals
This month has been a prime example of short-term market volatility. As a MoneyLion investor, it’s important for you to understand that short-term drops in the market are normal, and while you should stay educated on market activity, don’t let a temporary dip scare you off. Rest assured, when we look at market highs and lows historically, the overall market has always continued to rise over the long haul.
At MoneyLion, our objective is to help you invest appropriately to reach your long-term goals. That’s why we recommend an asset allocation portfolio that’s aligned with your personal investment preferences and risk comfort level. Our portfolios are also diversified to help cushion against market volatility, like what was experienced in October. You’re in good hands with MoneyLion.
Just in time for holiday shopping, wages and salaries are ⬆️
Wages and salaries rose 3.1% from July to September, which is the most significant increase in a decade. Various states and communities have increased minimum wages as well. If you’re seeing more money as a result, save that extra cash to get your kids something special this holiday season (or make additional contributions to your Zero-Fee Managed Investment℠ account).
Increased wages can also be a sign of impending inflation, which is a general rise in the cost of goods and services that erodes the purchasing power of the dollars in your wallet. When wages increase, and more money is in circulation, it could inflate prices since people are willing to spend more. You may remember that the Fed recently raised interest rates to help protect against rapid inflation and slow spending. It’s valuable to understand how these economic factors are all interconnected.
And now for your weekly Lionomics wrap-up. 🤓
Lionomics: Finance made easy
This week, Lionomics covered the importance of keeping cash in your investment portfolio. We explained why holding a little cash isn’t a wasted opportunity -- it’s a necessity. We also taught you how interest rates both reflect the economy and affect it. Check out this chart to see how drastically interest rates have changed over time.
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