Market Update for October 23, 2023

Ok, back to the markets.  There are three main points I want to make:

1.  We are just now moving from seasonal headwinds to seasonal tailwinds.  The market is historically likely to rise between now and sometime in later January, so that is prospectively good news.

2.  In the short run, we recently bounced off of the 4,220 level in the S&P 500 for the second time in a month.  As I write this we are only 0.5% or 24 points ahead of that figure, so it’s a tenuous bounce for now.  Holding that level would be a positive thing for where markets might head in the coming days and weeks.

3.  Looking back over the year as a whole, the S&P 500 hit a first quarter high of about 4,136 in very early February.  We then saw a very solid six month stretch take us to just under 4,600 by early August.  Especially in conjunction with the seasonal strength noted above in point #1, I would not want to see the market dip below this 4,136 level in the coming weeks/months, as that would potentially reverse the broader positive trends we have seen over the past year-plus.

The markets have withstood a barrage of bad news in the past few weeks, the biggest headline being the terrible situation in the Israel/Gaza region.  Short-term yields are now at multi-decade highs, potentially setting the stage for lower rates in the coming period.  Reduced interest rates might cause the Fed to raise their overnight lending rates additionally, but beyond that negative, lower rates are good for stocks, bonds, and commercial real estate.

Longer term, as I’ve mentioned for quite some time now, the historical middle of the bell curve for coming back to all time highs remains summer 2024, provided we do not find ourselves in a recession.  We are not in a recession today, the US consumer has been far too resilient thus far.