US Markets
Stocks fell in October as pre-election jitters hung over trading while solid but not spectacular Q3 corporate reports failed to buoy spirits.
The Dow Jones Industrial Average fell 1.34%, while the Standard & Poor’s 500 Index (S&P 500) slipped 0.99%. The Nasdaq Composite fell 0.52%.1
International News
Middle East tensions unsettled investors early in the month as oil prices rose. But as the month progressed, prices fell back as investors took a more measured, wait-and-see approach.2
Economic Data, Wave I
A bumpy beginning gave way to an upbeat jobs report from the Department of Labor, which boosted markets. The Fed has told investors that it’s now focused on the jobs market as well as inflation, which elevates the importance of the monthly jobs report.3
Stocks continued their climb, with the S&P 500 and Dow Industrial hitting fresh record highs–despite hitting a speed bump after CPI data showed inflation was slightly warmer than expected in September.4
Economic Data, Wave II
A short time later, the Producer Price Index (PPI) report showed that wholesale prices stayed flat last month—a welcome update after CPI data.5
Then, news that existing home sales fell to a 14-year low in October stymied markets. The third-quarter Gross Domestic Product showed 2.8% annualised growth, which was a bit short of economists’ expectations but sparked more talk of a “soft landing.”6,7
Q3 Reports
As the Q3 corporate season kicked off, update reports from a few money centre banks gave markets an added boost. But as the month wrapped up, mixed reports from a few mega-cap tech companies unsettled investors, who already seemed a bit anxious in the run-up to the election.8.
What Investors May Be Talking About in November
In the month ahead, investors will adjust to the outcome of the November election, which has been one of the most closely watched U.S. cycles in recent history.
While much focus goes on the presidency, what happens in the House of Representatives and Senate can have more influence on the policy agenda in 2025 and beyond. Here are a couple of areas to keep an eye on:
Taxes. Individual taxes and estate tax rates are expected to come into focus, given that the 2017 tax cuts are scheduled to expire at the end of next year. Corporate tax rates may also be revisited as discussions shift to what’s next with tax policy.
Government spending. From infrastructure to defense to entitlement programs, expect the financial markets to react as different ideas are proposed. But keep in mind that most changes generally follow a legislative process, which may take time to unfold as the issues are discussed and debated.
World Markets
The MSCI EAFE Index fell 5.50% in October with several European markets under pressure during the month.10
France was hardest hit, dropping 3.74%. Spain fell 1.72%, Germany lost 1.28%, and the United Kingdom dipped 1.20%. Italy was the outlier, picking up 2.68%.11
Egypt dropped 3.79%, while Mexico declined 3.46%. India fared worse, falling 5.83%.12
Pacific Rim markets were mixed despite the global slump. Japan picked up 3.06%, while China’s Hang Seng Index lost 3.86%. Australia fell 1.33%.13
The Fed
When the Fed concluded its two-day policy meeting on November 7, Chairman Powell gave investors his near-term outlook for short-term rates given what Fed officials see with inflation and, perhaps more importantly, the jobs market.24
Since 1977, when Congress amended the Federal Reserve Act, the Fed has had the dual mandate of pursuing maximum employment and stable prices. Policymakers want an inflation rate of 2% (as measured by the Personal Consumption Expenditures Price Index) while holding the Bureau of Labor Statistics unemployment rate at 4.1%.25
Over the next few weeks, investors will parse Powell’s November comments to gain insights into what 2025 holds for the bond market and the housing market, which is influenced by mortgage rates.
Our blog posts are intended for information purposes only and should not be interpreted as financial advice.
You should always engage the services of a fully qualified financial planner before entering any financial contract.
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1. WSJ.com, October 31, 2024
2. CNBC.com, October 7, 2024
3. WSJ.com, October 4, 2024
4. WSJ.com, October 10, 2024
5. CNBC.com, October 11, 2024
6. MarketWatch.com, October 23, 2024
7. WSJ.com, October 30, 2024
8. WSJ.com, October 30, 2024
9. SectorSPDR.com, October 31, 2024
10. MSCI, October 31, 2024
11. MSCI, October 31, 2024
12. MSCI, October 31, 2024
13. MSCI, October 31, 2024
14. WSJ.com, October 30, 2024
15. WSJ.com, October 4, 2024
16. WSJ.com, October 17, 2024
17. KPMG.com, October 17, 2024
18. KPMG.com, October 18, 2024
19. MarketWatch.com, October 23, 2024
20. Realtor.com, October 23, 2024
21. Realtor.com, October 24, 2024
22. The Wall Street Journal, October 10, 2024
23. KPMG.com, October 25, 2024
24. FederalReserve.gov, 2024
25. ChicagoFed.org, 2024
26. AAA.com, November 13, 2023
27. BTS.gov, 2024
28. USAToday.com, April 18, 2024
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