The Stock Market

The narrow rally in this year’s stock market, with fewer holdings having the bulk of YTD returns, has become more pronounced of late.  In fact, the S&P 500, which is market-cap weighted whereby the larger the company the more impact had on the overall market, is up approximately 9.8% YTD.  The lesser-known Equal Weighted S&P 500 Index whereby each of the underlying 503 holdings are equally weighted is down 3.68% YTD.  So far this year, large cap growth companies are dominating returns while more diversified portfolios are lagging.  Although challenging this year, we still believe diversification and asset allocation are prudent investment strategies. 

A Week of Alphabet Soup – EPS, GDP, PCE, ECB and IEA 

This is an exciting week!  Significant economic releases, and over 150 S&P 500 companies are to report earnings.  Will the narrow rally continue, or might we see a widening of returns in the market? 

The advance reading of Q3 GDP is to be released Thursday, 10/26.  If the Atlanta Fed’s GDPNow numbers are even halfway right, the economy remains resilient.  If the GDPNow numbers are only 3/4 right, then this economy is still growing at a nice clip.  When it comes to inflation, the question becomes will the bond market take care of the heavy lifting? Or, does the FOMC need to do more?  Or, will it take a combination of both to combat inflation?  Loretta Mester, the President of the Cleveland Federal Reserve Bank, shared that the myopic obsession over month-to-month moves in interest rates by the Fed is likely less meaningful than understanding the longer-term directional trends of interest rates.  We wholeheartedly agree.  And it seems as if the Fed is trying to tell the markets that rates will remain higher for longer. 

This same concept is similar to when looking at earnings estimates.  If earnings estimates are taken as the gospel, then many times investors will be disappointed.  But if using this data as a barometer of bullish or bearish sentiment, it serves as a more useful indicator of directional moves in earnings and the market. 

The Fed’s preferred measure of inflation the PCE (Personal Consumption Expenditures Price Index) is to be released Friday, 10/27.  This data could also move the markets.  A higher-than-expected PCE indicates a directional move in rates of higher for longer, whereas a lower PCE might suggest we’re nearing the end of a rate hiking cycle and possibly an eventual cut, perhaps next year.

As if that’s not enough, the ECB (European Central Bank) meets this week, and the IEA (International Energy Agency) will update its outlook for energy.

Strive to Evolve and Add Value 

Our goal is to learn and search for ways to add value and improve services for our trusted clients.  One such way is through technology enhancements.  We are in the process of adding greater tools and capabilities and will continue to do so.  We are thankful and honored to be recognized in this week’s Houston Business Journal as they highlight ways we hope to improve and therefore grow through implementing technology.  If interested and your schedule permits: https://www.bizjournals.com/houston/news/2023/10/22/joyce-wealth-management-technology-houston-growth.html utm_source=st&utm_medium=en&utm_campaign=me&utm_content=HO&ana=e_HO_me&j=33112030&senddate=2023-10-23&empos=p1

Thank you!

At a time when the world seems to be in chaos – from Ukraine to Israel, and to a certain degree even our nation’s capital, updates such as these seem rather trivial.  Sadly, many around the world are struggling for basic liberties, freedoms, and necessities of life.  Our hearts and prayers go out to those in harm’s way.

Thank you for your interest and your business.  We are honored to have the opportunity to work with the life savings of our friends and clients.  It is our hope and goal that we make a positive impact on the long-term success of our investors.  Thank you for the trust you place in us!  We are incredibly grateful and honored for the opportunity!