The markets sent investors mixed messages in October, generally trending upwards despite signs of volatility around the government shutdown and subsequent reopening. At the end of the month, stocks – which had enjoyed a days-long record run – began to show some weakness after Federal Reserve policymakers said the economy wasn’t growing quickly enough to curtail its bond purchases and dial back on some of its economic stimulus. It remains to be seen if the Fed will take action in December. The central bank’s statement on October 30 cited a slowing recovery in the housing market and continued uncertainty about the direction of the economy for its inaction. The statement also pointed out that fiscal policy has “restrained economic growth,” and that the Fed will continue to monitor incoming economic data.
Some economic reports were delayed as a result of the 16-day partial shutdown of the federal government, and we’re just now getting an idea of what the data indicate. We’re seeing an improved labor market, but unemployment is still too high. An ADP employment report noted that 120,000 private-sector jobs were created in October, less than the expected gain of 150,000 jobs. Consumer prices rose slightly but inflation remains benign, and housing spending and business activity are on the rise.
Many market observers are turning their attention to corporate earnings reports, which have been hit or miss with some companies handily beating expectations and others weaker than expected. As noted before, the markets had been steadily climbing upward prior to the Fed announcement. The S&P 500, for example, was up 4.5% for the month, while the Dow and Nasdaq rose 2.8% and 3.9%, respectively.
In other news, the Social Security Administration announced that recipients can expect to see a 1.5% cost of living adjustment added to their 2014 benefits. You may also like to know that we’re now in the annual open enrollment period for Medicare that happens each fall. You have until December 7 to review your benefit choices and costs and elect new coverage, if you need to make changes.
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Please call me to discuss how economic and market events could impact your financial plan. I look forward to speaking with you at a convenient time. Speaking of time, don’t forget to set your clocks back an hour on Sunday!
Ian Kiefer, CFP®
Investing involves risk, and investors may incur a profit or a loss. Past performance is not an indication of future results. Investors cannot invest directly in an index. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The performance mentioned does not include transaction costs which would reduce an investor’s return.