State of the Markets
Market pain for investors continued through September, as year-to-date declines increased with major US stock indexes falling for the third quarter in a row. The Standard and Poor’s (S&P) 500 and the Dow Jones Industrial Average both posted monthly declines of around 9%, and the NASDAQ dropped more than 10%, all greater than the prior month’s losses.
The S&P 500 Index is ending the quarter at an approximate 3600 level, negating an earlier 12% gain registered from July through mid-August, with all major stock indexes once again extending into bear market territory. According to Bloomberg, this marks the first time in almost 85 years that the index closed out a quarter in negative territory after experiencing a greater than 10% increase in the same quarter.
US stock indexes have fallen six of the past seven weeks. Additionally, the yield on the 10-year Treasury reached its highest level since 2008, almost breaching the 4% mark. It closed the quarter at 3.83%.
Global financial markets experienced this significant pressure in the last week of the quarter as global central banks, led by the US Federal Reserve (Fed), have collectively raised rates, and expressed a desire and willingness to keep them elevated higher and for longer to address aggressive inflation.
Exacerbating the situation, especially in Europe, are spiking energy costs resulting from, among other things, the Russian- Ukraine conflict. Eurozone inflation rose at an annual 10% rate in September, up from 9.1% the previous month. Notably, Germany reported an even steeper increase, with inflation climbing to 10.9% from 8.8% the previous month.