Stock growth remained steady for much of October lead again by Foreign Emerging Markets (32% YTD). Favorable corporate earnings reports, a strong jobs sector, and growing consumer income helped to overcome any trepidation's investors may have had. The S&P 500 is now up 17% YTD while a 60% global stock and 40% bond portfolio is up 12%.
Key Economic News
| Index | YTD | 1 Mo. | 3 Mo. | 3 Years | 5 Years |
| S&P 500 Index | 16.91% | 2.33% | 4.76% | 10.77% | 15.18% |
| MSCI EAFE Index (net div.) | 21.78% | 1.52% | 4.01% | 6.08% | 8.53% |
| MSCI Emerging Markets Index (net div.) | 32.26% | 3.51% | 5.39% | 5.70% | 4.83% |
| S&P Global REIT Index (net div.) | 3.22% | -1.05% | -1.70% | 3.59% | 6.69% |
| Barclays U.S. Aggregate Bond Index | 3.20% | 0.06% | 0.47% | 2.40% | 2.04% |
| 100% MSCI All Country World Index (net div.) |
19.69%
|
2.08%
|
4.45%
|
7.92%
|
10.80%
|
| 60% MSCI World & 40% Barclays US Agg Bond | 12.00% | 1.16% | 2.78% | 5.96% | 7.79% |
| 40% MSCI World & 60% Barclays US Agg Bond | 9.00% | 0.79% | 2.01% | 4.81% | 5.88% |
Key Economic News
- Employment: September saw a loss of 33,000 jobs after averaging 172,000 new jobs over the prior 12 months. It appears to indicate that the labor market is tightening with fewer jobs available and increasing wages needed to attract workers.
- Interest rates: The Federal Open Market Committee met in September and left the target federal funds rate range at 1.00%-1.25%. However, some economic indicators are showing mild inflationary pressures, which, when coupled with a tightening labor market, may lead to another interest rate hike at the next meeting in early November.
- GDP: The first estimate of the third-quarter gross domestic product showed expansion at an annual rate of 3.0%, according to the Bureau of Economic Analysis. The second-quarter GDP grew at an annualized rate of 3.1%. Results have been strong.
- Inflation: According to the Consumer Price Index, for the 12 months ended in September, consumer prices are up 2.2%, a mark that approaches the Fed's 2.0% target for inflation. Core prices, which exclude food and energy, are up 1.7% since September 2016.
Looking Ahead
The Federal Open Market Committee will likely raise the short-term interest rate following its meeting in the first week of November. Consumer spending should pick up entering the holiday season, which could nudge inflation higher.
As always: stay disciplined and focus on those things you can control.
To Your Prosperity,
Kevin Kroskey, CFP®, MBA
Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment.
