Welcome back to the Monthly Market Wrap from YCharts, where we review and break down the most important market trends for advisors and their clients every month. As always, feel free to download and share any visuals with clients and colleagues, or on social media.
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Unlike September, in which no sector finished in the black, all eleven sectors had a plus sign next to their name in October. Energy was up a whopping 25.0% thanks to rebounding oil prices, followed by a 13.9% jump for Industrials and 11.9% for Financials. The two relative laggards were Consumer Discretionary and Communication Services. Amazon (AMZN) weighed on Consumer Discretionary after reporting disappointing Q3 earnings—its stock sank 9.3% in October. Meta Platforms (META) did the same to Communication Services when its earnings miss caused the stock to plummet 30.4% for the month.
The yield curve further solidified its inverted state in October as the 10 Year-3 Month Spread flipped to negative for the first time in three years. The 10 Year-3 Month joined the 10-2 Spread in the inversion club, as the latter ended October 41 basis points below zero. The 1-Year Treasury Bill’s yield of 4.66% was the highest rate among US Treasuries. Every Treasury instrument was yielding north of 4% as of October’s end—the one exception was the 1-Month T-Bill, which closed out the month at 3.73%.
Off the YCharts! Wages Are Rising, But Purchasing Power…Not So Much
A raise is always welcome news, right? But with inflation at 40-year highs, how much has the average paycheck truly grown over the past couple of years?
As identified in our Quarterly Economic Summary Deck, inflation has certainly taken a bite out of Americans’ paychecks, according to average hourly earnings figures. US Average Hourly Earnings have risen 16.1% since June 2019, or about 4.7% on an annualized basis. However, US Real Average Hourly Earnings are now unchanged since then, and have declined 6.7% from the peak in April 2020. Despite the nominal increases to average hourly earnings, that “real” average take-home pay has failed to sustain any growth over the past three years.
Download our Q3 Economic Summary Deck to receive charts of the major economic events from Q3 in a slide deck that can be white-labeled for your own use. If you’re a YCharts client, access the deck by going to Support > Resources > Economic Summary Deck within YCharts.
Value stocks, represented by the iShares Russell 1000 Value ETF (IWD), surged 10.1% in October. The Value equity style is now down 7.2% over the past twelve months. Growth (IWF), on the other hand, increased 5.8% in October but actually failed to improve its TTM performance. Growth was down 22.7% between September 2021 & 2022, and is 24.8% lower between October 2021 & 2022 despite the positive gain this past month.
The unemployment rate fell back to a near-record low of 3.5% in September, one month after posting its first increase in the last seven. However, the labor force participation rate dipped 0.1 percentage point to 62.3%. The labor force participation rate sits 1.1 percentage points below its February 2020 high. At the state level, Florida’s unemployment rate of 2.5% was the lowest out of 10 major states.
The price of gold fell 1.4% MoM to $1,648.10 per ounce as of October 28th, and is down 8.7% year-to-date. Crude oil prices experienced a volatile October following steady declines since June. The spot price for a barrel of WTI crude settled at $86.54 at the end of October, after starting the month at $77.17 and reaching a high of $93.07 earlier in October. Brent closed out October at $94.64 per barrel after entering the month at $82.55 and bumping up against $100 in the first week of the month. Gas prices ended October about unchanged with the average price of regular gas at $3.86 per gallon in the final week of October, just three cents higher than a month ago.