Updates, Performance and Outlook
3rd Quarter 2022
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The third quarter of 2022 was another rocky one, combining an optimistic summer rally with a large selloff at the end.1
Driving the quarter’s performance were historically high inflation, aggressive Federal Reserve tightening, and concerns about the global economy.
Despite any challenge – BBK will continue to provide perspective, guidance, and most importantly protection for our clients.
Let’s take a look at how markets performed and what we might look forward to in the months to come.
How did the markets perform the last 3 months?
The broader U.S. market sank on continued interest rate and economic concerns.1
The tech-focused NASDAQ sank on higher interest rates and investor pessimism.1
Blue chip stocks also dropped in Q3 along with the broader market.1
What Could We See Six to Nine Months Ahead?
These are challenging times to make predictions about the future. It’s always a challenge, right? The following gauges represent a forward look at what some analysts think we might see over the next few months. Since a simple projection can’t represent all opinions or probabilities, we’ve highlighted risks and opportunities for each. It’s thoughtful and practical perspective.
U.S. Economic Outlook
Risks: Uncertainty about interest rates and economic outlook are likely to weigh on markets.
Opportunities: However, a peak in inflation could cause stocks to bounce back.3
Risks: Inflation, slowing growth, and higher interest rates could dent optimism.
Opportunities: A healthy job market, savings, and student debt relief could drive strong sentiment.2
Risks: The war in Ukraine could increase the risk of a direct conflict between Russia and NATO.
Opportunities: A peaceful settlement could lessen the damage and reduce the human and economic pain.4
The “I” word
Risks: Inflation could remain high and persistent, especially if energy prices spike.
Opportunities: Inflation could be past its peak and stabilizing.5
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Key Takeaways for Investors
You might have seen the headlines clamoring that stocks and bonds had their worst quarter in years.
But they don’t paint the whole picture. They’re just trying to grab your attention.
It’s easy to focus on the negative when the future looks uncertain and grim.
Humans are wired that way. We tend to skip right over the positive news and focus on the negative.
I don’t have a crystal ball to be able to tell you what the economy or markets will do next.
I can’t tell you whether we’re in a recession yet or whether one is coming.
I can tell you that we have a resilient economy, the jobs market still looks healthy, and investors are poised for optimism if inflation and interest rate hikes stabilize.
I can also tell you that the last quarter of the year has historically been a strong period for stocks.6
The bottom line is this: we can’t control the macro environment. But we can control our own actions and reactions.
Looking ahead, we’re expecting significant volatility through the rest of the year as investors digest inflation and economic data, Federal Reserve moves, and midterm elections in November.
I’m watching, I’m judging the conditions, and I’ll be in touch with changes
Questions? Please reach out. We’re grateful to be working with you…
Tyler E Smith
On behalf of the BBK Wealth Team
1 – https://www.cnbc.com/2022/10/02/stock-market-futures-open-to-close-news.html
2 – https://economics.td.com/us-quarterly-economic-forecast
3 – https://www.morningstar.com/articles/1115789/whats-next-for-the-stock-market
4 – https://www.blackrock.com/corporate/insights/blackrock-investment-institute/interactive-charts/geopolitical-risk-dashboard#risk-summary
5 – https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/economic-and-market-update/
6 – https://www.cnn.com/2022/10/03/investing/premarket-trading-stocks/index.html
U.S. Economic Outlook, Equity Outlook, Consumer Sentiment, Monetary Policy, Geopolitical Risk, and Inflation gauges: https://www.cnr.com/insights/speedometers.html (October 2022)
The S&P 500 is a stock index considered to be representative of the U.S. stock market in general. The NASDAQ Composite Index is an unmanaged composite index of over 2,500 common equities listed on the NASDAQ stock exchange. The Dow Jones Industrial Average is a price-weighted index that tracks 30 large, publicly traded American companies.
All index returns exclude reinvested dividends and interest. Indices are unmanaged and cannot be invested into directly.
Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.
This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. This content may contain projections, forecasts, and other forward-looking statements that do not reflect actual results and are based on hypotheses, assumptions, and historical financial information. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.