“Quarterly Market Insights: Q3 2023”

Hello. I am Danny Lacey with Kramer Wealth Managers. I am pleased to share 3rd Q Market Report.

Stocks lost a portion of their first-half gains in the third quarter
as a continued tight monetary policy from the Federal Reserve sent
bond yields higher, making stock investors nervous throughout August
and September.

For the three months ending September 30, the Dow Jones Industrial
Average declined 2.62 percent, while the Standard & Poor’s 500 Index
lost 3.65 percent. The Nasdaq Composite fell 4.12 percent.1

The strong price momentum during the first half of the year continued
into the start of the third quarter as stocks rose in July. Cooling
inflation, a better-than-anticipated second-quarter earnings reports,
and a hopeful belief that the U.S. economy may avoid falling into a
recession helped fuel the gains.

However, in August, sentiment turned. Multiple challenges—including
rising bond yields, credit rating downgrades (both U.S. government
debt and corporate debt), and continued economic weakness in
China—dampened enthusiasm. A late-month rally trimmed losses.

Earnings Outlook Brightens

The second-quarter earnings season, which largely ended in August,
helped support stocks with better-than-expected results. As of August
25th, with 485 of the companies in the S&P 500 reporting, 79 percent
posted earnings above market estimates.2

Perhaps more importantly, Wall Street’s outlook for third-quarter
earnings improved during the quarter. Consensus analysts’ forecasts
are estimating a 0.2 percent growth in earnings for the S&P 500
companies. Although this forecast appears slightly underwhelming, it
would mark the first quarter of year trailing earnings growth since
the third quarter of 2022.3

————————–

Despite some hotter than expected inflation data, The Fed elected to
keep interest rates unchanged following the September meeting of the
Federal Open Market Committee (FOMC). Fed has not signaled what it
may do with regards to rates at its upcoming two-day meeting, ending
on November 1st, indicating that its decision will be data-dependent.

With the government shutdown averted in late September, the Fed will
have current data when the FOMC meets.

Expect investors to be especially sensitive to September inflation
data, which is scheduled to be released in mid-October. Should
consumer prices and producer prices be higher than anticipated, the
prospect of a rate hike may potentially jump.

However, if the report data comes in lower than expected it may take
some pressure off the Fed.
Thank you for watching.