Monthly Market Insights - October 2024

Election Jitters, a Gold Rush, and The Housing Market’s Big Chill

October has proven that even the best-laid plans can feel like juggling chainsaws in a windstorm. In this issue, we’ll cover how two major hurricanes impacted residential and commercial real estate, the new gold rush (for gold), and why Larry Fink thinks the upcoming election will be a mere ripple in market waters. Let’s dive in, shall we?

Real Estate: Setting The Wrong Kind of Record

The housing market suffered a major blow last month as existing home sales plunged to their lowest point since 2010, slipping 1.0% in September to an annual rate of 3.84M units. Mortgage rates that initially dipped after recent Fed cuts have since rebounded, with the 30-year fixed rate hovering around 6.44%—a level that keeps entry-level homes just out of reach for many.

This marked the second month in a row of declining sales, as prospective buyers continue to be squeezed out by high prices and mortgage rates that refuse to budge. Even with supply up 1.5% from August and a robust 23% YoY, affordability remains the real hurdle, especially for first-time buyers.

Regionally, the numbers tell an even more interesting story. Home sales took a hit nationwide, but the South felt it hard, with sales down 1.7%. Some of this can be attributed to Hurricane Helene and Milton’s lasting impact, with rebuilding costs putting extra pressure on both inventory and prices. Interestingly, the West saw a surprising uptick in home sales, bucking the broader trend.

Markets: Stocks Spike, Bonds Slip, Gold Glitters

With a full head of steam from September, the stock market maintained its bullish momentum into October, setting a new all-time high of 5,864.67 by EOD October 18th—although, by the 31st, the index had slipped 0.99% from September. The Nasdaq Composite and Dow Jones Industrial Average followed suit, setting new all-time highs (18,712.75 and 43,275.91), but ending the month slightly lower than in September, down 0.52% and 1.34%, respectively.

Meanwhile, it’s been a choppy month for bonds, with a 2% drop in October. Traditionally a safe haven, bonds are feeling a bit less dependable these days—and investors are looking to commodities for protection. Cue gold (the original Bitcoin?) which surged an eye-popping 32.99% YTD. Typically, when investors dogpile into gold like this, it signals that inflation fears are alive and well.

For those who remember the ’80s, this may even feel a bit like déjà vu—but with a modern twist. While some sectors are benefiting from inflation, others are getting the short end of the stick, so it’s wise to consider your asset mix carefully.

Election Year: Much Ado About…Nothing?

With the presidential election just a few days away, political chatter is peaking, and everyone’s wondering what it means for the markets. As it turns out...it may mean less than we think.

“We see repeatedly every year, every four years, when we have an election, everyone says that it’s going to have a dramatic change in the market, and over time it doesn’t,” Blackrock CEO Larry Fink told Bloomberg Television at the Berlin Global Dialogue 2024 conference. “I know it’s great for media to talk about it, I know it’s great for everyone to focus on it but the reality is the economy, the markets are way beyond one election, way beyond one action,” Fink added. “We are able to respond and cope and build.”

Of course, Fink is talking about the long term—that’s not to say there won’t be any short-term fireworks. Both Trump’s hefty tariffs and Harris’s government spending proposals have stirred up inflationary rhetoric, leading many to wonder if we’re in for another wave of price hikes.

Global Macro: Black Swan Watching

Finally, as if domestic concerns weren’t enough, October also brought geopolitical tensions back into the spotlight. The conflict in the Middle East has taken center stage, sparking concerns that could easily rattle global markets. For now, oil prices are holding steady, but any disruption to supply chains could drive them up, adding fuel to inflationary pressures.

For the cautious investor, this isn’t a call to panic but a reminder of the importance of diversification. If oil prices spike or global tensions lead to trade disruptions, portfolios with a mix of assets—including safe-haven commodities like gold—may weather the storm better than others.

What’s Next?

October has left us with a strange mix of optimism and caution. On one hand, economic indicators like falling jobless claims seem to suggest strength in the labor market. On the other, a fragile real estate market and shifting bond dynamics highlight vulnerabilities we can’t ignore. Add in the election frenzy and you’ve got a recipe for heightened volatility into the holidays.

But here’s the silver lining: as Larry Fink pointed out, elections rarely deliver the kind of market shock many anticipate. The savvy investor should pay attention to the Fed’s rate policy, inflation trends, and global events that could throw a curveball. Stay diversified, keep an eye on the fundamentals, and remember—in times of volatility, the best approach is often to just turn down the noise.

Onward and upward,

Steven and Daniel

STEVEN W. SCHMITT, MBA, CFP®, CPM®, CRPS®, ADPA®

Managing Director, Private Wealth Advisor

CA Insurance # 0G61253

The Schmitt Group of Raymond James

Any opinions are those of Steven Schmitt and Daniel Mar and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information contained in this commentary does not purport to be a complete description of the securities, markets, or developments referred to in this material. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including asset allocation and diversification. Past performance does not guarantee future results. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results. Bond prices and yields are subject to change based upon market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. There is an inverse relationship between interest rate movements and fixed income prices. Generally, when interest rates rise, fixed income prices fall and when interest rates fall, fixed income prices rise.

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