The average value of U.S. stock funds rose 8.7 percent in October on the back of a rising stock market, according to data from Refinitiv Lipper.
The Dow Jones Industrial Average rose 14% during October, posting its best month-over-month gain since 1976 (the S&P 500 and Nasdaq were up in single-digit percentages).
Since the beginning of 2022, the value of equity funds has fallen 18.1%, compared with a jump of 22.5% last year.
The value of international equity funds rose 5.1% in October, but has collapsed 25% since the beginning of the year.
The pressure on stock markets this year has also come from a series of aggressive interest rate hikes by the U.S. Federal Reserve (Fed).
Last week, the Fed expectedly raised its benchmark interest rate by 75 basis points at the end of its fourth consecutive meeting – to 3.75-4% per annum, the highest since January 2008.
Fed Chairman Jerome Powell said during a press conference following the meeting that the Fed may begin discussing a slowdown in the pace of rate hikes as early as the December meeting. However, he noted that it’s too early to talk about a pause in the cycle of rate hikes, its ceiling will be higher than previously expected.
Thus, the October rally of the stock market may be only a pause in the long-term decline, writes The Wall Street Journal.
Investors will continue to follow the statements of the Fed management and the regulator’s decisions on rates in the near term.
In turn, the European Central Bank (ECB) last week raised all three key interest rates by 75 bps for the second consecutive meeting. The benchmark interest rate on loans was raised to 2%, the deposit rate to 1.5% and the rate on margin loans to 2.25%.
Meanwhile, the value of bond funds declined in October and has fallen sharply since the beginning of the year. Funds focused on investment grade debt securities lost an average of 1.4% in October and 16.2% YTD.
