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Weekly Update for the week ending October 4, 2024

October: A Month of Market Mayhem or Opportunities?

September may be notorious for its volatility, but October is when the real drama unfolds in the markets. October has witnessed some of the stock market’s most jaw-dropping crashes, earning its reputation for volatility. One of the earliest examples was the Panic of 1907, which peaked in October, wiping out about 50% of the market’s value due to a banking crisis sparked by failed speculation. Then there’s Black Tuesday, October 29, 1929, a date forever linked to the crash that ushered in the Great Depression. Preceded by Black Thursday (October 24) and Black Monday (October 28), this period erased massive wealth and sent shockwaves across the global economy. Fast forward to October 19, 1987—Black Monday—when the Dow Jones nosedived 22.6% in a single day, the largest one-day percentage drop in US history. Fueled by program trading, overvalued stocks, and low liquidity, this crash triggered investor panic.

However, October is also known for remarkable recoveries. After the 1987 crash, the markets began to recover within months, regaining most losses by year-end. Similarly, October 2002 signaled the bottom of the bear market that followed the dot-com bubble burst, paving the way for a bull run that lasted until October 2007, during which the S&P 500 more than doubled, driven by economic recovery, low interest rates, and strong corporate earnings. While October is notorious for downturns, it also marks key turning points toward recovery.

Weekly Update for the week ending September 20, 2024

Connecting the Dots II: US Economic Data and Fed Policy
Last week, I talked about how Canadian economic reports connect [link to sept. 13] and impact Bank of Canada (BoC) decisions, which in turn affect investors. This week, I will dive into the American economic reports, exploring how the US Federal Reserve (Fed) uses data to shape interest rates, and what that means for us Canadian investors.

Weekly Update for the week ending August 30, 2024

Since 2019, Nvidia’s (NASD: NVDA) share price has soared 3,476%, thanks to its pivotal role in supplying the heart of artificial intelligence (AI). Few companies wield as much market influence as Nvidia, and anticipation was sky-high leading up to its earnings release. Investors were on edge, eager to see whether Nvidia would meet or surpass expectations.

Weekly Update for the week ending August 23, 2024

Inflation and pricing

It was a relatively quiet week for the markets in terms of economic news. In the USA, investors focused on the mid-week release of the minutes from the Federal Reserve’s (Fed) last Federal Open Market Committee meeting and Fed Chair Jerome Powell’s speech at the Jackson Hole Economic Symposium, at the end of the week. These two events are crucial in indicating whether the Fed plans to lower the US benchmark rate at their September meeting.

In Canada, the biggest economic headline was the July Consumer Price Index (CPI) inflation report, which reveals whether inflation is rising or falling. Spoiler alert: it is still falling. 😊 But here is an important point—just because inflation is down does not mean prices are lower. It only means that the pace of price increases has slowed.

Weekly Update for the week ending August 2, 2024

This past week, the US Federal Reserve (Fed) announced that it would keep the benchmark interest rate at 5.5%, a move that was widely expected. However, the Fed also hinted at the possibility of a rate cut in September, as inflation cools and the labour market shows signs of slowing. The Federal Open Market Committee (FOMC) unanimously agreed to maintain the federal funds rate in the 5.25% to 5.5% range, where it has been for the past year.

Weekly Update for the week ending July 19, 2024

This past week, many of the big-name mega-cap technology companies (companies with market capitalization exceeding $200 billion which represents the total value of all outstanding shares) that have driven the indexes to record heights all year long lost favour with investors. In fact, much of this past week’s declines can be attributed to these same companies. This includes Alphabet (NASD: GOOGL), Amazon.com (NASD: AMZN), Apple (NASD: AAPL), Microsoft (NASD: MSFT) and Nvidia (NASD: NVDA).