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November 2022 Market Commentary: Earnings Are Up And So Are Rates

October Recap and November Outlook

Equity Markets in October

  • The S&P 500 was up 7.99%

  • The Dow Jones Industrial Average gained 13.95%

  • The S&P Mid-Cap 400 returned 10.42%

  • The S&P Small-Cap 600 increased 12.27%

Source: S&P. All performance as of October 31, 2022

Earnings reports have begun and are better than expected. Of 276 issues reported, 191 have beaten estimates on revenue. Q3 2022 is expected to post an 11.9% gain over Q2 2022 and be up 0.8% over Q3 2021. Sales are expected to set a record, with a 1.9% increase over the Q2 2022

record and up 11.3% over Q3 2022, but this may be due to higher prices. Volatility continues to increase. Daily intraday volatility, measured by the daily high/low, increased to 2.14% from September’s 1.91%. It was 1.28% in August. Year-to-date volatility was 1.88%, compared to 2021 volatility of 0.97%, which was more in line with historical volatility.

Bond Markets

The 10-year U.S. Treasury ended the month at 4.05%, up from 3.84% in September. The 30-year U.S. Treasury ended October at 4.17%, up from 3.78% last month. The Bloomberg U.S. Aggregate Bond Index ended October down 1.29%. The year-to-date return at month end was -15.71%.

The Smart Investor

The Fed’s language on giving the economy time to adjust to rate increases has lowered expectations for the amount of upcoming interest rate moves. A 50-basis point move in December, and again in February now appear likely. Attention has shifted to how long the Fed will continue to increase rates.

Markets will likely remain driven by economic data releases, as we saw with the October payroll number out in early November. This means volatility will be elevated, as the fear of recession is still at the forefront.

As we enter the final months of the year, focusing on good housekeeping in your financial plan is important. High inflation has meant changes to social security benefits, tax brackets, and tax-efficient savings contribution limits. Taking time to assess where you can take advantage to increase savings or lower your overall tax picture, not just this year, but every year, makes sense.

Good housekeeping chores include:

  • Tax planning to take advantage of higher tax brackets

  • Utilize increased contribution limits on 401ks and HSAs

  • Revisit the amounts you are holding in cash in light of higher interest rates

  • Be proactive with year-end portfolio rebalancing and tax-loss harvesting


About The Author

Alchemist Wealth is led by the expertise of Andrew J. Tudor, CFP®, RICP®, CAP® and Fred Tudor III, AFC®, MBA. Alchemist Wealth serves clients as a fiduciary specializing in providing fee-only financial planning, investment management, and retirement planning services. With over 2 decades of combined experience in financial services, Fred and Andrew bring a wealth of knowledge and personalized solutions to meet your financial goals.

The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.

This content not reviewed by FINRA


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