General Market Commentary as of September 30, 2022
While Q3 was not as bad as Q2, the market continued its downward trend and posted negative numbers resembling the losses realized in Q1. The S&P 500 ended the quarter down -5.28%, the Dow Jones Industrial Average was off -6.66%, and the Nasdaq Composite lost -4.11%. The Federal Reserve remains in the spotlight and during their meeting last month they raised the federal funds rate by another 0.75 percentage points. This marked the third consecutive increase of 75 basis points and overall was the fifth rate increase this year. The target rate range now sits from 3.00% to 3.25%. Their efforts to combat skyrocketing inflation has shown mild success which leads economists to believe more increases are on the way in Q4.
The US stock market -4.46% (Russell 3000 Index) fared better for the quarter than the international stock market -9.20% (MSCI World ex USA Index). Domestically, growth outperformed value and small caps outperformed large caps. Energy (-0.8%) and consumer discretionary (-3.1%) were the top two performing sectors while communication services (-13.7%) and real estate (-14.2%) were the bottom two performing sectors. In terms of bonds, the global bond market -2.21% (Bloomberg Global Aggregate ex-USD Bond Index) fared better than the US bond market -4.75% (Bloomberg US Aggregate Bond Index). Interest rates increased across all bond maturities in the US Treasury market for the quarter.
The continued uncertainty regarding historically high inflation, interest rate hikes, growing geopolitical tension, and the upcoming midterm elections have investors on edge. Despite the outcome of the election and if and when a recession is declared, the most sensible approach is to remain disciplined with one’s asset allocation; in the long-term markets have rewarded those who have stayed invested.
Market Recap
| Tot Return | 3-MO* | 12-MO* | 3-Year* | 5-Year* | Closing Value |
|---|---|---|---|---|---|
| S&P 500 | -5.28% | -16.76% | 6.40% | 7.31% | 3,585.62 |
| Dow Jones Industrial Average | -6.66% | -15.12% | 2.19% | 5.10% | 28,725.51 |
| NASDAQ Composite | -4.11% | -26.81% | 9.75% | 10.24% | 10,575.62 |
Source: Morningstar. The S&P 500, Dow Jones Industrial Average, and NASDAQ Composite are unmanaged indexes. It is not possible to invest in an index. Past performance is no guarantee of future results. * Price only. Does not include dividends.
All overviews and commentary are intended to be general in nature and for current interest, educational purposes and factual reference only and are subject to change based on market and other conditions.
