Geopolitical matters¹ have complicated the tug-of-war between fiscal² and monetary³ policies and contributed to investor concerns about increased policy uncertainty. Policy uncertainty will likely persist, but we think financial markets will climb this wall of worry.

Our View

Investors are facing a host of unresolved international and domestic issues, in addition to an upcoming U.S. presidential election, all of which are contributing to an overall sense of uncertainty. Luckily, financial markets have been adept at powering through “walls of worry” in this bull market, which is now in its 10th year.

Stocks fell for a third straight week as investors gauged the health of the U.S. economy and its impact on future monetary policy. The S&P 500 Index climbed on September 30 after the U.S. administration denied claims that the United States is exploring plans to limit U.S. investors’ portfolio flows into China. Then, the S&P 500 kicked off the fourth quarter with a 3% slide over two days, spurred by pessimism after an Institute for Supply Management (ISM) report (released Monday) showed manufacturing activity fell to a 10-year low in September. Tepid data flow continued into Thursday, when a separate ISM report showed services ac

The U.S. labor market keeps chugging along, despite signs of weakness in other pockets of the U.S. economy.

Nonfarm payrolls rose 136,000 in September, and July and August payrolls growth were revised up by 45,000. The 12-month average payrolls change climbed to 179,000 including Friday’s data, still slightly higher than the expansion average.

Overall, the September jobs report showed hiring has been steady, defying recent worries of economic weakness after surprisingly weak manufacturing and services surveys were released earlier this week. Other labor-market measures also look healthy. The unemployment rate f

Well, that wasn’t the start to the fourth quarter that the bulls wanted. The S&P 500 Index has dropped at least 1% on consecutive days to start the fourth quarter for the first time in history. It was down about 3% after two days, the worst start to the fourth quarter since 2009.

So, what has happened or changed? There are still headlines on the impeachment inquiry, protests in Hong Kong, weakening manufacturing data, and trade tensions. As we discussed on October 2, September was historically calm and October tends to be quite volatile. So maybe it was simply “time” for some seasonal volatility.