Last week, the Dow (+1.3%), NASDAQ (+0.1%) and S&P 500 (+0.8%) exhibited positive gains amidst continued volatility in the markets. Conversely, taxable bonds had a horrific week as they decreased about 0.5% - 1.0%, and tax-free municipal bonds decreased 0.2% - 0.4% for the week. Bonds continued their descent as interest rates showed a rise last week, with the 10-year Treasure yield eclipsing 1.6%, the highest since June.
As noted in the last two previous weekly recaps, volatility in the markets was expected to be high, as Washington continued to dominate the headlines. Last week, the markets recovered from their recent dip, as Congress approved the increase of the debt limit. This agreement relieved short term concerns, but provided no long-term solution, as this will capture the political headlines again in December. Hopefully all eyes will move away from the headlines and onto corporate earning, which is supposed to begin this week. Let’s hope for not only strong earnings, but favorable guidance moving forward.
In real economic news, we had mixed unemployment reports last week. On a dismal note, the US economy added only 194K new jobs in September, compared to an expected 497K new jobs. On a more positive note, business hiring in September was 568K, exceeding expectations of 450K. Further, the number of continuing unemployment claims fell sharply from 7.9 million in August to 4.17 million in September, but economists believe that was a direct result of the expiration of extended Federal unemployment benefits.
The views stated in this letter are not necessarily the opinion of Cetera Advisor Networks LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.