October 2023 Market Summary

This is a new installment in an ongoing series where Marc Bautis, Wealth Manager and Founder of Bautis Financial, comments on hot topics in the financial industry.

Stocks declined for the third straight month in October, with the Dow Jones Industrial Average falling 1.3%, the S&P 500 slipping 2.1%, and the NASDAQ giving up 2.8%.

Globally, Emerging Markets fell 3.9% and EAFE lost 4.0%. Small and mid-cap stocks were the most adversely affected; the Russell 2000 dove 6.8%, while the large-cap Russell 1000 gave up only 2.4%.

After being the only US stock sector to finish in the black for the last two months, Energy was the biggest laggard in October, with a 5.8% decline. Only Utilities and Technology advanced higher in October, up 1.3% and 0.1%, respectively.

None of the eleven asset classes on the quilt posted a positive performance in Q3. Fixed income fared better than the field, as Muni Bonds lost only 0.9% while US Treasuries and Aggregate Bonds slipped 1.2% and 1.6%, respectively. US Small Caps had the worst month, tumbling 6.8%.

Housing Prices and Mortgage Rates

Mortgage rates continued to shoot higher as the 15-year Mortgage Rate breached 7% for the first time since 2000, while the 30-year Mortgage Rate approached 8%. Housing prices took a hit as a result; the Median Sales Price of Existing Homes fell for the third straight month and was below $400,000 for the first time since May.

Employment

September’s unemployment rate was unchanged at 3.8%, as was the labor force participation rate at 62.8%.

Inflation vs. Fed Funds Rate

At 3.70%, the US inflation rate for September was essentially unchanged from August’s 3.67% level. Core Inflation decreased for the sixth straight month, down from 4.35% in August to 4.15% in September. The US Consumer Price Index MoM rose 0.40% in September, and the YoY US Producer Price Index rose by two-tenths of a percentage point to 2.17%.

The Federal Reserve kept the benchmark Target Federal Funds Rate unchanged at 5.50% for the second consecutive FOMC meeting, which took place on November 1st.

Oil and Gas Prices

After breaching $90 per barrel in September, the price of WTI oil reversed course in October and ended the month at $83.03 per barrel, a decline of 8.5%. The price of Brent fell 5.35% to $90.73 per barrel but stayed above that key $90 level. Lower oil prices helped deliver drivers some relief at the pump, as the average price of regular gas fell 36 cents in October to end the month at $3.60 per gallon, its lowest level since March.

Cryptocurrency Rebound

Major cryptocurrencies went back “to the moon” in October. The price of Bitcoin surged 27.7% in October to $34,498.70 per coin, while Ethereum jumped 9.5% to $1,809.64 per ether. Bitcoin has officially doubled its price YTD, having advanced 108.3% on the year through the end of October. Ethereum is now 51.2% higher YTD.

Fixed Income

The yield curve trended toward normalcy in October. Yields on the 3-year, 5-year, 10-year, 20-year, and 30-year treasuries all increased by double-digits, with the 30-year logging the largest rise of 31 basis points. The 20-year and 30-year both eclipsed 5% for the first time since July 2007, ending the month at 5.21% and 5.04%, respectively. Italy’s Long Term Bond Interest Rate was overtaken by the US 10-year, and Japan’s 10 Year Government Bond Interest Rate neared 1% in October.

Bautis Financial LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

Bautis Financial Advisor Commentary: November 8, 2023