Friday, 9/29/2023 p.m.

  • Stocks lose momentum and end the month modestly lower – After opening higher on Friday on enthusiasm around a better core PCE inflation reading, stocks ended up closing the day modestly lower. This came as a last-minute attempt by Speaker Kevin McCarthy to keep the U.S. government open did not pass. The S&P 500 is down about 4.8% for the month and is lower by around 6.4% since its recent high on July 31. The technology-heavy Nasdaq saw bigger losses, pulling back 5.5% for the month and 7.5% since July 31*. Bond yields held steady on Friday, with the 10-year Treasury yield at 4.58%*, still near the highs of the cycle. The rapid rise in yields this month, with the 10-year up nearly 0.5% in September, has weighed on both stock and bond returns. However, in our view, yields may be heading toward a peak, which would be welcomed by equity and fixed-income investors.
  • Core inflation data continues to show signs of moderation – U.S. PCE (personal consumption expenditure) inflation data for the month of August was in line with forecasts that called for a tick higher in headline inflation and cooling core inflation. Headline PCE inflation data climbed to 3.5% year-over-year in August, in line with expectations but above last month's 3.3% reading. Meanwhile, core inflation eased, up 3.9%, lower than last month's 4.2% reading*. We saw a similar diversion between headline and core CPI (consumer price index) inflation earlier this month as well. This comes as oil and energy prices have climbed higher, adding upward pressure on headline inflation. Core inflation, however, has benefited from falling used and new car prices, as well as some cooling in wage growth. In our view, core inflation may continue to move gradually lower as the shelter and rent component moderates, and as services consumption and wages potentially ease.
  • U.S. government-shutdown headlines continue as deadline approaches – The likelihood of a U.S. government shutdown continues to grow higher as the October 1 deadline approaches, and the two parties continue to struggle to pass a continuing resolution. It is important to note that shutdowns have been a regular occurrence in recent history but have not lasted long. Since 1976 there have been 20 government shutdowns lasting for a day or more. The most recent one in December 2018 lasted 35 days, setting a record as the longest in U.S. history*. From an economic standpoint, we would expect a short-term slowdown in growth around the shutdown period but a quick recovery in activity in the subsequent months. In other words, a shutdown would displace or delay spending and economic activity, not eliminate it. From a market perspective, the uncertainty that a potential government shutdown introduces can lead to a short-term uptick in volatility. But as with most political events, government shutdowns have historically had little lasting impact on equity performance. Stocks were positive half the time during the government closures and were higher in most cases three and six months later.

Mona Mahajan
Investment Strategist


Investment Policy Committee

The Investment Policy Committee (IPC) defines and upholds Edward Jones investment philosophy, which is grounded in the principles of quality, diversification and a long-term focus.

The IPC meets regularly to talk about the markets, the economy and the current environment, propose new policies and review existing guidance - all with your financial needs at the center.

The IPC members - experts in economics, market strategy, asset allocation and financial solutions - each bring a unique perspective to developing recommendations that can help you achieve your financial goals.

Learn More

Important information:

This is for informational purposes only and should not be interpreted as specific investment advice. Investors should make investment decisions based on their unique investment objectives and financial situation. While the information is believed to be accurate, it is not guaranteed and is subject to change without notice.

Investors should understand the risks involved in owning investments, including interest rate risk, credit risk and market risk. The value of investments fluctuates and investors can lose some or all of their principal.

Past performance does not guarantee future results.

Market indexes are unmanaged and cannot be invested into directly and are not meant to depict an actual investment.

Diversification does not guarantee a profit or protect against loss.

Systematic investing does not guarantee a profit or protect against loss. Investors should consider their willingness to keep investing when share prices are declining.

Dividends may be increased, decreased or eliminated at any time without notice.

Special risks are inherent in international investing, including those related to currency fluctuations and foreign political and economic events.