🪨 How Q3 GDP Keeps The Fed Stuck Between A Rock And A Hard Place
Major stock market indices have rebounded in October as investors hope for a slowdown in the pace of Fed rate hikes. As of Friday, October 28, the S&P 500 had gained 8.8% over the month, and its year-to-date loss was cut to 18%, just slightly better than bear market levels. The Dow is now above correction territory with a 9.6% year-to-date decline, while the Nasdaq, consisting of hard-hit tech stocks, gained 5% in October to reach a year-to-date pullback of 29%. This occurred despite a jump in interest rates, with the 10-year U.S. Treasury yield rising above 4%. What's driving market optimism, and how should long-term investors maintain perspective?
We discuss in this episode of The Wealth Effect Podcast:
📈 Quarterly GDP Growth Rates Since WWII
📊 Components of GDP Growth
📉 Market Implied Future Fed Funds Rates
Matt Faubion, CFP®
Founder - Wealth Manager
Show notes and charts:
The economy grew in the third quarter after a tough first half of the year
Consumer spending is robust but rate-sensitive sectors are struggling
Fed rate expectations have fallen, boosting markets
The bottom line: The latest GDP numbers show that there are still bright spots in the economy, despite the many challenges with inflation. The Fed remains stuck between a rock and a hard place, and much of the recent market rally can be attributed to pre-mature hope around a "Fed Pivot."
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