Investment Review - September 2022
- The major averages sold off sharply in the month of August. The Dow Jones Industrial Average fell 2.7%, the S&P 500 declined 3.3%, and the Nasdaq Composite dropped 4.3%. The August sell-off continued the year-to-date losses for each of the indices: Dow Jones Industrial Average (-13.3%), S&P 500 (-17.0%), and Nasdaq (-24.5%).
- Stocks turned negative during the month of August following comments from Chairman Powell. Prior to the speech at Jackson Hole, the S&P was +2.5% for the month and continuing the momentum from strong 2nd quarter earnings. Powell’s comments told the market that he was willing to raise rates in order to stop inflation at the risk of inciting a recession.
- Interest rates continued to rise in August with parts of the yield curve inverted. The 10-year Treasury note yield rose 48 basis points to 3.13% from 2.65% at the beginning of the month. The 2-year Treasury note rose 56 basis points to 3.44% from 2.89% at the beginning of the month. The 3-month T-bill and 10-year note spread is a better indicator of economic conditions and remains positive, for now. An inverted yield curve is suggestive of a recession to come.
Key Investment Statistics
Sources: Factset, WSJ, US BEA, US BLS, Federal Reserve, Institute for Supply Mgmt., Yardeni Research
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