Market Recap: September 2022

Market commentary

• The revised estimate of second quarter GDP showed a modest contraction of (0.6%), marking consecutive negative GDP prints and heightening expectations that the U.S. has or will fall into a recession
• Headline inflation decelerated slightly in August, although core inflation increased
• Jobs are plentiful even with the unemployment rate ticking up to 3.7% as participation increased
• Consumer confidence increased again following a recent string of declines, signaling a potential positive for consumer spending

Select economic and market data

Equities

• Stocks fell again in September, with the S&P 500 losing over 9% for the month and moving into bear market territory for the year
• Losses were broad-based for the month, with all major indices posting near-double-digit losses
• As of quarter-end, nearly all major stock indices have declined at least 20%

Fixed income

• Treasury rates moved sharply higher as the Fed maintained its tighter monetary policy stance
• The yield curve remains inverted, which is often associated with recessionary periods
• Aside from T-bills, bond prices fell in September and are sharply lower for 2022

Strategic outlook

• Some caution is warranted on equities; slightly favoring small-cap and mid-cap domestic stocks for long-term returns
• Maintaining shorter-duration fixed income structure as the rising interest rate environment is likely to persist
• While some patience may be required, longer-term value exists in select equities