In October, the U.S. stock and bond markets experienced a decline, driven by escalating geopolitical tensions, rising interest rates, and concerns over political discord in Washington, D.C. The S&P 500 index saw a decrease of approximately 2.2 percent for the month, while the yield on the 10-year U.S. Treasury Note rose from 4.59 percent to 4.88 percent by the end of October. Crude oil prices also dropped by about 8.8 percent, settling at $81.54 per barrel.
This decline in the S&P 500 index marks the third consecutive month of losses, coinciding with the upward trend in interest rates. To illustrate, the yield on the 10-year U.S. Treasury Note stood at approximately 4.0 percent in early August, but by late October, it had surged to just above 5.0 percent. This represents a significant shift in a relatively short span of time. While we have been highly critical of the Federal Reserve for some time, there have been few prominent figures willing to call them out. However, just a week ago, Jamie Dimon, the CEO of J.P. Morgan, candidly stated, “I want to point out the central banks eighteen months ago were 100 percent wrong.”
When confidence wanes, markets tend to feel the impact. Encouragingly, historical data shows that markets often rebound after oversold conditions, such as those observed at the close of October. Over the last ten years, the S&P 500 has rallied in the month of November in 9 out of 10 instances.