Ouch! Last week was brutal, as the Dow (-6.5%), NASDAQ (-5.5%), and S&P 500 (-5.6%) all exhibited sharp losses, causing what was going to be a strong month of October to end in negative territory. Corporate and government bonds were also down about 0.2% - 0.6% last week, so portfolios were hit from both sides. For the month, the indices lost 2.3% to 4.6%, with October now being the second month in a row for losses to the indices. That said, each month was characterized by one really bad week, as we had a stretch of about six weeks in between when the US market indices were very positive. For a sneak peak into investors’ October statements, diversified portfolios lost about 1% for the month, with losses slightly greater for more aggressive portfolios, and slightly less for more conservative portfolios.
Last week, the US reported a record GDP gain of 33.1% for the third quarter. Of course, it’s “easier” to do when you’re comparing to a dismal prior quarter that was devastated by COVID. Plus, a record 86% of S&P 500 companies (so far) have reported quarterly earnings that exceeded expectations. Unfortunately, the record GDP and earnings data weren’t enough to offset the headlines that drove the markets down. The failed stimulus package, concerns over an increase in COVID cases, and the potential of economic shutdowns were the main causes of the markets tumbling last week.
Over the weekend, England reported that it would shut down for a month, COVID cases continued to rise, and the uncertainty of the election dominated the headlines. Yet, market futures are kicking off the day very positive. One thing is for certain – the markets can be awfully unpredictable!
Have a great day and week, and be sure to get out and vote tomorrow.