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October Market Update


The final quarter of 2019 is here. Like many previous Octobers, the tenth month of 2019, has started with a dud. Early last week, on the first trading day of October, all major indices finished down more than 1%. October is generally thought of as a ‘worst month’ for the markets. This was a misnomer however, and that is due to market crashes which have occurred or begun during the month. Digging deeper into the performance data reveals that we might be in for a nice surprise this time around. The following chart comes from MarketWatch.com and it show October S&P 500 returns following a 1% decline on the first trading day of the month. As you can see in the chart below, of the 14 times the market has dropped 1% or more to start October, it has returned an average of 7.22% over the final three months of the year.

The chart above from Fidelity gives you a sense of how little an investor would earn currently in a typical bank or government savings account. Contrast the yield above with the 30-yields below from some of Fidelity’s short duration bond funds. One can easily see how hard the e-broker or financial service companies (i.e. Fidelity, Charles Schwab, JP Morgan etc.) are working to keep investors from pulling their funds in an easy lending environment…an absolute win for all our clients.

Source: Fidelity

The tweet above came out shortly after the Institute for Supply Management released its latest ISM Manufacturing Index reading of 47.8%; the lowest level in more than a decade. ISM readings above 50 signal business expansion and conversely, readings at or below 46 signal recession. Manufacturing is a smaller part of the US economy than in the past, but the ISM Manufacturing Index is still a very closely watched number, and one which directly impacted market performance during the past week. The chart below from the Institute for Supply Management shows the ISM over the past few years.

Impeachment has been on the front page of our news over the past few weeks. Impeachment is a complicated process that can end with a president being removed from office. Last Tuesday, following a whistleblower story related to a July phone call President Trump had with Ukrainian President Volodymyr Zelensky, House Speaker Nancy Pelosi, announced that the House of Representatives would begin impeachment proceedings against President Trump. The first step in the impeachment process is known as launching a ‘impeachment inquiry.’ Only three Presidents have been in this position before: Andrew Johnson, Richard Nixon, and Bill Clinton. It is unlikely that Rep. Pelosi will have the votes for the next step in the impeachment process: passing articles of impeachment. The chart below from the Washington Post shows the Democratic party’s abrupt move toward the September 24 impeachment inquiry.

We wish all our clients a wonderful October and hope you are able to enjoy the heart of fall with those nearest and dearest to you. Thank you for your continued confidence and trust.

HighTower Advisors, LLC is a SEC registered investment adviser. Securities are offered through HighTower Securities, LLC – Member FINRA/SIPC


HighTower Great Lakes is registered with HighTower Securities, LLC, member FINRA and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. The team and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.

This document was created for informational purposes only; the opinions expressed are solely those of the team and do not represent those of HighTower Advisors, LLC, or any of its affiliates.