Stock Market Insights: Jumping hurdles: stocks and war

“She stopped in front of the hurdle.”

My cute wife had a good high school track career, but hurdles were not her event. Her friend jumped like a gazelle, but the one time my wife tried hurdles, she slid to a stop, too scared to jump.

Right now, stocks are jumping over two major hurdles.

With the S&P 500 up just over 4% as of Oct. 17, stocks are having an October to remember on the heels of a September to forget. Savvy investors saw the September market lows as a buying opportunity and raced in to buy the dip.

But of course, there are those two lurking hurdles: Interest rates staying higher for longer than expected and the Israel-Hamas war.

First, the market might have to live with higher interest rates for much longer than anticipated. It seems there won’t be any significant rate cuts until the middle of 2024. However, there are reasons for optimism. The Federal Reserve chairman said on Oct. 19 that they are probably finished raising rates, which isn’t as great as a rate cut but is still good news.

The second and most interesting storyline is the current Israel-Hamas war. Following the hospital bombing in Gaza, oil prices have moved higher, but only slightly. Though this war has the potential to escalate and upset global markets, the stock market has coughed it up to the Middle East being the Middle East.

The stock recovery doesn’t come without risks and some timely maneuvering because of the monetary policy uncertainty and escalating tensions in the Middle East. I have pulled back on some on international stocks in the accounts I manage from a slight overweight to a more neutral stance while increasing my large-cap value holdings. I do this mostly because of weakening European economies, better-than-expected economic growth in the U.S. and a strengthening of the U.S. dollar.

With an expectation of solid earnings reports this quarter, oil prices remaining in check and interest rates at least holding, we could have some upside opportunities in the remaining months of this year.

After all these years, my wife continues to be faster than me but is still a timid jumper.

Right now, stocks are doing well jumping the hurdles, maybe not like a gazelle, but good enough for a solid month. Let’s hope they don’t get timid too.

Have a blessed week.

Fervent Wealth Management is a financial management and services entity in Springfield, Mo. Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.

Opinions are for general information only and not intended as specific advice or recommendations. All performance cited is historical and is no guarantee of future results. All indices are unmanaged and can’t be invested in directly.

The economic forecast outlined in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Visit www.ferventwm.com for more information.

The economic forecast outlined in this material may not develop as predicted & there can be no guarantee that strategies promoted will be successful.

Fervent Wealth Management is a financial management and services entity in Springfield, Missouri.