Markets closed lower today as a surge in energy prices, driven by volatile geopolitical developments, offset enthusiasm for the unofficial kickoff of the third-quarter corporate earnings season. Geopolitics served as the primary catalyst for market volatility today, heavily impacting every sector after the strikes on the Saudi airports. President Trump is considering joining the efforts to fight the Houthi rebels that launched the strikes. Over the weekend President Trump also tried to push forward an "energy ceasefire" between Russia and Ukraine, but by all accounts, that seems like just talk.
The Russell 2000 small cap index fell 0.45%, the Nasdaq was down 0.44%, the S&P dropped 0.06%, while the Dow was up 0.38%. The VIX rose 2½% to 15.2 after the tension in the Middle East. Bond yields were unchanged today as that market was closed for Columbus Day. Oil rose over 1% with WTI up to $93 while Brent crude rose to $106 after the fighting in the Middle East and continued energy disruptions from the Russia/Ukraine war. Metals were mixed as the dollar strengthened and awaiting inflation data later this week while crypto fell across the board.
Despite the down day for the averages, eight of the eleven major sectors finished higher on the day. Those sub-sectors outperforming to the upside today were MLP Energy, Natural Resources, Internet, and Energy Infrastructure. There aren't any earnings of note after the close, but tomorrow morning kicks off Q3 earnings season with announcements from Albertson's, Citigroup, Domino's, Goldman Sachs, Johnson & Johnson, JP Morgan Chase, United Health, and Wells Fargo. Economically, markets will get existing home sales figures in the morning.
One More Thing — History is giving the bulls a reason to stay optimistic. When the S&P 500 is up 10% to 20% by late September, it has finished the quarter higher 86% of the time, with an average gain of 5.3%.
As always, if you have any questions regarding the information in this email, please don't hesitate to contact me.
Content curated and written daily by Douglas Emitte
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