Well, not that spooky any more. We got the big rate cut that the market wanted—0.50%. It was an interesting couple of days when that happened. The market did almost nothing on the actual day it was announced. It wasn’t until the following day that we saw some upside from it. This leads me to believe that, if they didn’t cut that much, we would’ve seen a significant pullback.
September started eerily similar to August. We had a big pullback the first week, then a nice upside surprise the rest of the month. We closed out the quarter with record highs in the DOW and S&P500!
This coming Friday’s September jobs report will be watched closely by the Fed and market participants. It will be a clue as to whether the economy is simply cooling off, or will it be a surprise that prompts another big interest rate cut. The Fed has said that they are in no hurry for another half-point cut, but you never know what data may change.
As I mentioned in the last letter, don’t forget that we are at or near record highs so it will be a bumpy road trying to break through. It’s important to be comfortable with your risk tolerance. I’m happy to talk with you about this at your annual review (or any time for that matter). With the S&P500 up over 20% YTD, this is an outstanding year thus far. I know nobody (including me) wants to have it drop 10%, BUT EVEN IF IT DID, we would still be having a good year. You’ll want to keep this in mind if the market volatility picks up over the next month or so.
Did I mention volatility??? As election season rolls around, I’m always asked about how investments are affected. There really isn’t a perfect way to look at it, but we have some historical info. Keep in mind a few things we’ve talked about before from LPL Research (that’s their graph at the top) which has given us some data on this topic. There’s a bit of at that old saying of “gridlock is good”, at least when it comes to the government and markets. The idea is that gridlock at the government level (legislative branches controlled by opposing parties) allows businesses to carry on without worrying about any big changes in policy.
When Republicans have controlled both chambers in Washington, DC, on average the S&P 500 has gained 13.4%. When Democrats have controlled both the House of Representatives and the Senate, the S&P 500 was up 10.7% on average. When we’ve had a split Congress, however, the average S&P 500 gain climbed to 17.2%, suggesting markets may prefer split power come November.
That’s all the politics I want to dive into. I’ll leave the rest to you and your circle! I just can't wait for the commercials to end. :)
Have a Happy Halloween! As with every year, I’m probably about to start my annual peanut butter cup binge! Thank you for being with our firm. We are extremely appreciative.
Larry Mroczkowski
President
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All investing involves risks, including the loss of principal.