Market Summary: October 2022

Economic Developments & Market Update &

Market Update Economic Developments

  • Positive earnings reports led to positive returns from leading technology and consumer discretion companies such as Apple and Amazon. The S&P 500 Index was up 8.10% in October, breaking its multi-quarter losing streak. The Index was still down -17.70% year-to-date as of the end of October.
  • Mortgage Bankers Association (MBA) mortgage applications have been dropping for four months straight and are currently sitting at their 22-year low. Decreased demand in the housing market is due to continued interest rate increases, which have amplified the average 30-year fixed mortgage rate to just under 7%.
  • The Consumer Price Index (CPI) has risen 8.2% since September 2021. Food and shelter are the most significant contributors to the overall rise in inflation.

EQUITIES

October 2022 Equities Chart: Large Cap, October 8.10%, YTD -17.70%, 1-year -14.61%; Mid Cap: October 2022 8.88%, YTD -17.55%, 1-year -17.17%; Small Cap: October 2022 11.01%, YTD -16.86%, 1-year -18.54%; International (Dev.): October 2022 -5.38%, YTD -23.17%, 1-year -23.00%; Emerging Markets: October 2022 -3.10%, YTD -29.42%, 1-year -31.03%

Benchmark Indexes: Large Cap = S&P 500; Mid Cap = Russell Mid Cap; Small Cap = Russell 2000; International Developed = MSCI EAFE; Emerging Markets = MSCI EM.

Other Assets & Fixed Income Market Update &

Fixed Income Market Update Other Assets

  • The Federal Open Market Committee increased their target for the federal funds rate by 0.75% at their November 2nd meeting to combat inflation. The early November increase has brought short-term borrowing to its highest level since January 2008. Chairman Powell said, “We think we have a ways to go; we have some ground to cover with interest rates… before we get to that level of interest rates that we think is sufficiently restrictive.”
  • The spread, or difference in yield, between short-term and longer-term treasuries has inverted to levels not seen since the fall of 1981. From a historical perspective, an “inverted yield curve” has signaled upcoming recessionary periods.
  • Core Fixed Income posted a -1.30% return in October. Bond prices have an inverse relationship with interest rates, and as long as the Fed continues to raise rates, bonds will likely continue to struggle.
  • Midstream Energy remains a top performer, increasing 11.05% in October with a 24.53% return year to date.

FIXED INCOME AND OTHERS

October 2022 Fixed Income & Others Chart: Core Fixed Income, October 2022 -1.30%, YTD -15.72%, 1-year -15.68%; Defensive Fixed Income: October 2022 -0.13%, YTD -4.70%, 1-year -4.93%; Munis: October 2022 -0.22%, YTD -8.27%, 1-year -7.96%; Floating Rate: October 2022 1.03%, YTD -2.25%, 1-year -1.78%; Midstream Energy: October 2022 11.05%, YTD 24.53%, 1-year 16.94%

Benchmark Indexes: Core Fixed Income = Bloomberg US Agg Bond; Municipal Bonds = Bloomberg Municipal 5Yr 4-6; High Yield = ICE BofA US High Yield; Floating Rate = S&P/LSTA Leverage Loan; Midstream Energy = Alerian Midstream

Information for this report was provided by CRA’s Investment Advisor, Innovest Portfolio Solutions.

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Market Summary: October 2022

Economic Developments & Market Update & Market Update Economic Developments Positive earnings reports led to positive returns from leading technology and consumer discretion companies such as…

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