The S&P 500s streak of four down weeks was broken when it closed at 4308 on Friday. Monday was the first trading day of October and interest rates continued their climb with the 10-year Treasury yield topping 4.7%, its highest level since October 2007. While Mondays action was flat, selling dominated the markets on Tuesday and accelerated when the House of Representatives ousted Kevin McCarthy as speaker, the first time in history that the chamber has dethroned its leader. At Tuesdays closing bell the S&P 500 had one of those daily moves of greater than one percent to the downside. On Wednesday we clawed back some of those losses, and Thursday we meandered as the markets waited for Septembers employment report before Fridays open. That report showed that nonfarm payrolls rose by 336,000, revisions to July and August showed an additional 119,000 jobs created, and the unemployment rate holding steady at 3.8%. While this was seemingly good economic news, the markets sold off again on inflation fears leading to a gap down at the open and hit an intraday low of 4219 about 40 minutes later. However, from there the markets had a stunning turnaround with the S&P 500 hitting an intraday high of 4324 around 3PM before stalling out in the final hour. When all was done, this reversal resulted in the S&P 500 up over one percent for the day and a positive weekly gain. From a technical perspective, the S&P 500 came close but remained above its 200 day Moving Average all week. On Thursday its Performance Ranking (a weighted average of 1, 3, 6 and 12 month returns) turned negative but bounced back above zero with Fridays bullishness. And lastly on Friday, the Bollinger Band (BB) Index, which measures volatility (BB width/BB mid), reversed itself so this oversold condition might be ending. That said, one good day does not make a trend. Next week we get inflation numbers and the FOMC minutes on Wednesday and Thursday, and on Friday the 13th consumer sentiment and bank earnings reports. Then the next Federal Reserve policy meeting starts on Halloween. For TSP TIPS well echo what was said above about one good day does not make a trend. As such, we recommend no changes to our current investment mix.
The S&P 500s streak of four down weeks was broken when it closed at 4308 on Friday. Monday was the first trading day of October and interest rates continued their climb with the 10-year Treasury yield topping 4.7%, its highest level since October 2007. While Mondays action was flat, selling dominated the markets on Tuesday and accelerated when the House of Representatives ousted Kevin McCarthy as speaker, the first time in history that the chamber has dethroned its leader. At Tuesdays closing bell the S&P 500 had one of those daily moves of greater than one percent to the downside. On Wednesday we clawed back some of those losses, and Thursday we meandered as the markets waited for Septembers employment report before Fridays open. That report showed that nonfarm payrolls rose by 336,000, revisions to July and August showed an additional 119,000 jobs created, and the unemployment rate holding steady at 3.8%. While this was seemingly good economic news, the markets sold off again on inflation fears leading to a gap down at the open and hit an intraday low of 4219 about 40 minutes later. However, from there the markets had a stunning turnaround with the S&P 500 hitting an intraday high of 4324 around 3PM before stalling out in the final hour. When all was done, this reversal resulted in the S&P 500 up over one percent for the day and a positive weekly gain. From a technical perspective, the S&P 500 came close but remained above its 200 day Moving Average all week. On Thursday its Performance Ranking (a weighted average of 1, 3, 6 and 12 month returns) turned negative but bounced back above zero with Fridays bullishness. And lastly on Friday, the Bollinger Band (BB) Index, which measures volatility (BB width/BB mid), reversed itself so this oversold condition might be ending. That said, one good day does not make a trend. Next week we get inflation numbers and the FOMC minutes on Wednesday and Thursday, and on Friday the 13th consumer sentiment and bank earnings reports. Then the next Federal Reserve policy meeting starts on Halloween. For TSP TIPS well echo what was said above about one good day does not make a trend. As such, we recommend no changes to our current investment mix.