Are Higher Interest Rates Beginning to Impact Growth Expectations?

October Scares Markets.

Although US economic growth was stronger than expected, equities were down in October amid geopolitical conflict, rising longer-term US bond yields, and mixed earnings takeaways. All three major US stock market indices were down for the third straight month. Both the S&P 500 and the Dow Jones Industrial Average had their worst October since 2020 while the Nasdaq Composite had its worst October since 2018. US small-caps (-5.8%) were among the worst performers, followed by US mid-caps (-5.3%) and broad-based emerging markets (-3.5%). Bonds were also down as investment grade corporates fell 2.4%, 7-10 year US Treasuries declined 1.9%, and the US Aggregate Bond Index decreased 1.6%. Aside from crude oil (-7.2%), commodities produced positive returns as gold was up 7.4%, silver gained 3.2%, and broadbased commodities increased 0.4%