Quarterly Market Insights | October 2023

U.S. Markets

Stocks lost a portion of their first-half gains in the third quarter as a continued tight monetary bias from the Federal Reserve sent bond yields higher, unsettling stock investors throughout August and September.

For the three months ending September 30, the Dow Jones Industrial Average declined 2.62 percent, while the Standard & Poor’s 500 Index lost 3.65 percent. The Nasdaq Composite fell 4.12 percent.1

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The only way to predict the future is to create it.

Peter F. Drucker, management consultant, educator, and author, whose writings contributed to the foundations of modern management theory

A July Rally Faded

The strong price momentum during the first half of the year continued into the start of the third quarter as stocks rose in July. Cooling inflation, a better-than-anticipated kick-off to second-quarter earnings reports, and a growing belief that the U.S. economy may avoid falling into a recession helped fuel the gains.

However, in August, sentiment turned. Multiple headwinds—including rising bond yields, credit rating downgrades (both U.S. government debt and corporate debt), and continued economic weakness in China—dampened enthusiasm. A late-month rally trimmed losses, although it wasn't enough to keep August from ending in the red.

Headwinds in August

August’s stock slide continued into September. An early-month rally faded, beginning with the start of a labor strike at the major automakers and a drop in consumer confidence. Rising oil prices further darkened investor mood as it fueled fears that the Fed might need to raise rates again to combat inflation caused by higher energy prices.

Earnings Outlook Brightens

The second-quarter earnings season, which largely ended in August, helped support stocks with better-than-expected results. As of August 25th, with 485 of the companies in the S&P 500 reporting, 79 percent posted earnings above market estimates.2

Perhaps more importantly, Wall Street’s outlook for third-quarter earnings improved during the quarter. Consensus analysts’ forecasts are estimating a 0.2 percent growth in earnings for the S&P 500 companies. Although this forecast appears slightly underwhelming, it would mark the first quarter of year-over-year earnings growth since the third quarter of 2022.3

Q3 Sector Scorecard

Most industry sectors experienced declines in the third quarter, including Consumer Discretionary (-5.20 percent), Consumer Staples (-7.23 percent), Health Care (-3.01 percent), Industrials (-5.53 percent), Materials (-5.21 percent), Real Estate (-9.60 percent), Technology (-5.71 percent), Financials (-1.60 percent), and Utilities (-9.95 percent). Both Communications Services (+0.75 percent) and Energy (+11.36 percent) rose over the last three months.4

What Investors May Be Talking About in October

The Fed elected to keep interest rates unchanged following the September meeting of the Federal Open Market Committee (FOMC), despite some hotter-than-expected inflation data. The Fed has not signaled what it may do with regards to rates at its upcoming two-day meeting, ending on November 1st, indicating that its decision will be data dependent.5

With the government shutdown averted in late September, the Fed will have current data when the FOMC meets.

Expect investors to be especially sensitive to September inflation data, which is scheduled to be released in mid-October. Should consumer prices and producer prices be higher than anticipated, the prospect of a rate hike may potentially jump.

However, if the report data comes in lower than expected it may take some pressure off the Fed.

World Markets

For Q3 2023, the MSCI-EAFE Index fell 4.71 percent.6

European markets were mixed, with quarterly losses in France (-3.84 percent), Germany (-4.71 percent), and Spain (-1.72 percent). The U.K. tacked on 1.02 percent and Italy was flat (+0.04%).7

Pacific Rim markets were down for the quarter, with China’s Hang Seng falling 5.85 percent and Japan’s Nikkei dropping 4.01 percent.8


Gross Domestic Product (GDP)

The final revision of second-quarter GDP reflected a 2.1 percent annualized growth rate, which was down from the first-quarter GDP growth of 2.2 percent.9


Nonfarm payrolls grew by 187,000 in August, while the payroll estimates of June and July were revised downward by 110,000. Over the last three months, job gains have averaged 150,000, which is down substantially from its 238,000 monthly average gain for March through May.10

Retail Sales

Retail sales rose 0.6 percent in August, although much of the gain was due to higher gasoline prices. When excluding auto and gas sales, retail sales rose just 0.2 percent, which was above the 0.1 percent consensus forecast.11

Industrial Production

Industrial output at the nation’s factories, mines, and utilities rose 0.4 percent in August, exceeding expectations of a 0.2 percent gain.12


Housing starts skidded 11.3 percent, touching levels not seen since the pandemic. The steep decline was the result of a large drop in new construction of multifamily homes.13

Existing home sales fell 0.7 percent as higher mortgage rates and low inventory continued to weigh on the markets. Sales were down by 15.3 percent from last August.14

New home sales slid 8.7 percent in August, although they were higher by 5.8 percent from a year ago.15

Consumer Price Index (CPI)

A jump in gasoline prices pushed August inflation higher, with consumer prices increasing 0.6 percent month-over-month. For the last 12 months, prices have risen 3.7 percent versus the 3.2 percent annual increase in July. But core inflation, which excludes food and energy, eased from its 4.7 percent increase in July to a 4.3 percent rise in August.16

Durable Goods Orders

Orders of goods designed to last three years or longer rose 0.2 percent in August, beating economists’ expectations of a decline of 0.5 percent. Durable goods orders have risen during five of the last six months.17

The Fed

After raising interest rates by a quarter of a percentage point in July, the FOMC elected to keep interest rates unchanged following their September 19–20 meeting. They did, however, signal that another rate hike was likely before the end of the year.

In his post-announcement press conference, Fed Chair Jerome Powell emphasized that the inflation battle was not finished and future rate hike decisions would be based on the economic data.18

With the government shutdown averted in late September, the Fed will have current data when the FOMC meets Oct. 31–Nov. 1.

By the Numbers: Health Literacy Month


Percentage of the population that will comprise adults 65 years and older by 2030

$236 billion U.S. dollars (USD) annually19

Estimated economic cost of poor health literacy


Year by which all baby boomers will be of retirement age


First ever health literacy assessment conducted by the Department of Education

77 million21

Projected number of the population 65 years and older by 2034

76.5 million21

Projected number of the population under the age of 18 by 2034

1 in 622

Number of people in the world age 60 or older by 2030

1 billion22

Current global population age 60 or older: 1 billion

1.4 billion22

Projected global population age 60 or older by 2030

2.1 billion22

Projected global population age 60 or older by 2050

373 million people23

Total estimated U.S. population by 2053

38 years old21

Current median age of the U.S. population

43 years old21

Median age of the U.S. population by 2060

76.4 years old24

Current average life expectancy

1. WSJ.com, September 30, 2023

2. LipperAlpha.Refinitiv.com, August 25, 2023

3. FactSet.com, September 15, 2023

4. SectorSPDR.com, September 30, 2023

5. FederalReserve.gov, 2023

6. MSCI.com, September 30, 2023

7. MSCI.com, September 30, 2023

8. MSCI.com, September 30, 2023

9. MarketWatch.com, September 28, 2023

10. WSJ.com, September 1, 2023

11. Finance.Yahoo.com, September 14, 2023

12. MarketWatch.com, September 15, 2023

13. Bloomberg.com, September 19, 2023

14. CNBC.com, September 21, 2023

15. Morningstar.com, September 26, 2023

16. WSJ.com, September 13, 2023

17. WSJ.com, September 27, 2023

18. WSJ.com, September 20, 2023

19. Health.gov, 2023

20. BusinessInsider.com, January 1, 2023

21. Census.gov, 2023

22. WHO.int, 2023

23. CBO.gov, 2023

24. CDC.gov, 2023

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.


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