“Time is your friend, impulse is your enemy.”
-Jack Bogle
Here’s what you need to know this week:
- Market volatility makes an expected return
- Investors prepare for a bevy of economic data
- One last election reminder
Volatility
If you read last week’s blog, you may recall me saying that market volatility around a presidential election is par for the course. It turns out this year is no different: the S&P 500 lost more than 1% and then gained it back, and is currently sitting on a slight gain over the past week. The industrial-leaning Dow Jones has lost roughly 1.1% in the last week, while the tech-heavy NASDAQ notched its first all-time high since early July. As we discussed previously, this kind of volatility is normal right before an election and long-term investors should tune out the noise.
Busy Week
Markets are in for a busy week on top of the presidential election. First is the third quarter corporate earnings season: nearly half of the S&P 500 component companies are slated to release their quarterly earnings this week[1]. The majority of companies who have already reported have beaten their earnings estimates, but this week will be a key snapshot of the current state of corporate America.
Next up is the Personal Consumption Expenditures (PCE) report, the Federal Reserve’s preferred measure of inflation, for the month of September. This report will be released early Thursday morning and analysts are expecting the report to show monthly inflation at 0.2% and annualized inflation at 2.1%[2]. If the report meets or comes close to expectations then this would likely increase investors’ confidence in more interest rates going forward. The Federal Reserve is set to announce another interest rate decision next Wednesday and markets are all but certain of a 25 basis point (0.25%) interest rate cut: as of writing, the bond market is currently assigning a 97.6% chance of a 0.25% cut next week[3].
Last is the nonfarm payrolls (NFP) report for the month of October coming this Friday. This report shows the amount of new jobs added in the American economy as well as the unemployment rate. This month’s report is expected to show an unusually low number of jobs added due to the string of hurricanes that have ravaged the American Southeast, but the unemployment rate is expected to hold steady at 4.1%[4]. Barring a large surprise in either the PCE and/or NFP reports, we are likely to see another interest rate cut next week.
Final Election Reminder
By this time next week, it’s likely that we will either know who won the Presidential election or at least will have a good idea. Presidential elections are obviously important, but they are not particularly important to the financial markets. If you’d like to read a more thorough analysis of the history of elections and financial markets, you can check out our blog post from a few weeks ago, but the most important chart to me is this one:
The American economy is much stronger than any one person, even the President.
*Next week’s blog will come on Thursday instead of Wednesday so that we might have a clearer outlook on the election results
What Else
- The price of oil continues to drop as tensions between Israel and Iran appear limited in scope
- The OKC Thunder have started the year 3-0 and play the San Antonio Spurs tonight at 8:30 PM on ESPN
- The OKC baseball team officially announced their new name as the “OKC Comets”
- OU plays Maine at 1:30 PM on ESPN+
- OSU plays Arizona State this Saturday at 6:00 PM on FS1
What We’re Reading
If you have children you may be familiar with Uncrustables, the frozen crustless sandwiches from Smucker’s. It turns out children aren’t the only people who enjoy them: a new report claims that the NFL collectively consumes over 80,000 Uncrustables a year! Click below to read how the humble snack became the go-to treat of the NFL:
What’s Happening Downtown
The Carpenter Square Theater is hosting an adaptation of “Dial M for Murder”, a play by Frederick Knott, from October 25th – November 10th. Showings run Thursday through Sunday of each week, click below to learn more:
Written by: Kane Ogle, CFP®
Steve Beck, Amber Eduvigen, CFP®, Kane Ogle, CFP®, Cale Olbert, CFP®, Brett Valentine, Brandon Ingerson, Jenni Hess, Anne Boone
Sources: [1] Bloomberg [2] Morningstar [3] CME FedWatch [4] Yahoo! Finance