November 2022 Markets Brief

Posted on November 9th, 2022

U.S. equity markets rebounded in October with the Dow Jones, S&P 500, and Nasdaq indices all posting gains for the month. Technology, health care, and financial stocks were the largest contributors to the S&P 500 Index, but these sectors have begun to see significant headwinds in the past couple of weeks.

U.S. dollar strength weakened last month as well, helping stock gains as equity earnings are expected to improve as a result of a weaker dollar. Overseas sales are more profitable for U.S. companies when the U.S. dollar is weaker.

Short-term Treasury bonds continued to post higher yields than longer-term Treasury bonds. Six-month maturity bonds yielded 4.57% at the end of October, higher than 30-year maturity bonds at 4.22%. This condition where longer term yields fall below short term yields is called an inverted yield curve, and has historically indicated a coming recession.

Mortgage and consumer loan rates held steady in October, which have been hindering the housing and consumer markets. FreddieMac reported average rates on 30-year fixed mortgages above 7% at the end of October, their highest levels since 2002.