This Monday, October 9, marks the 10-year anniversary of the S&P 500's highest point before the Great Recession. While the ensuing decade has provided quite a rocky road for the markets at times, the recovery is undeniable.[1]

In fact, last week, markets posted one record high after another, and the S&P 500 had its longest streak of record closes since 1997.[2] At the markets' close, the S&P 500 added 1.19%; the Dow gained 1.65%; and the NASDAQ grew by 1.45%.[3] International stocks in the MSCI EAFE lost 0.07%.[4]

These domestic gains came despite stocks stumbling slightly on Friday in reaction to disappointing jobs numbers. After seven years of monthly growth, the September jobs report indicated the first labor market contraction since 2010, with 33,000 jobs lost. The decrease was largely due to the aftermath of Hurricanes Harvey and Irma. Despite this unexpected contraction, however, the unemployment rate fell to its lowest level in 16 years, and average hourly earnings increased by 2.9%.[5]

We also began the first trading week of the 4th quarter last Monday, so we will review Q3's performance and what lies ahead for Q4. 

How did the markets perform in Q3?

If we had to pick one word to describe performance in Q3, it would be: positive.

1.  Sustained Market Growth

Throughout the quarter, all four indexes we track in this weekly update had solid showings and hit a number of record highs. The S&P 500 was up 3.96%; the Dow rose 4.94%; the NASDAQ jumped 5.79%; and the MSCI-EAFE gained 4.81%.[6] Both the Dow and S&P 500 marked their 8th straight quarter of gains, and the NASDAQ was not far behind with its 5th positive quarter in a row.[7] The S&P 500 even had its least volatile September in over 47 years.[8]

2. Continued Global Gains 

Globally, European and emerging markets posted their third straight quarters of impressive gains.[9] In September, Chinese manufacturing experienced its fastest growth since 2012.[10]

What drove the markets in Q3?

Rather than last quarter's growth rallying around a few sectors, markets advanced broadly in Q3, with 10 of the 11 S&P 500 sectors gaining.[11] This positive performance reflects solid corporate earnings, stronger oil prices, and impressive core capital goods orders, though inflation remained below the Fed's target of 2%.[12] 

What is on the horizon for Q4?

By most accounts, betting against a strong 4th quarter seems like a bad idea: The S&P 500 has grown during Q4 in 7 out of the past 8 years.[13] Americans remain generally bullish on the economy and continue to increase their spending as their incomes grow and inflation remains low.[14] 

In addition, manufacturing, services, and housing all seem to be supporting economic expansion.[15] This growth is not limited to the United States; globally, 94% of countries are experiencing year-over-year economic growth.[16] 

Of course, the coming weeks will give us an even clearer understanding of Q3 performance -- and Q4 expectations. If you have questions about how the markets are affecting your portfolio and future, please let us know. We are here to provide the guidance you need and help clarify your investment process.

ECONOMIC CALENDAR

Monday: Banks Closed for Columbus Day Holiday
Wednesday: JOLTS
Thursday: Jobless Claims
Friday:  Consumer Price Index, Retail Sales, Consumer Sentiment


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Diversification does not guarantee profit nor is it guaranteed to protect assets.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies. 

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indices from Europe, Australia and Southeast Asia. 

The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and weighted to produce the index.

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The Federal Reserve System (also known as the Federal Reserve and, informally, as the Fed) is the central banking system of the United States. The Federal Reserve System is composed of 12 regional Reserve banks which supervise state member banks. The Federal Reserve System controls the Federal Funds Rate (aka Fed Funds Rate), an important benchmark in financial markets used to influence the supply of money in the U.S. economy.

Inflation is the rise in the prices of goods and services, as happens when spending increases relative to the supply of goods on the market. 

A recession is a significant decline in activity across the economy, lasting longer than a few months.  The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP); although the National Bureau of Economic Research (NBER) does not necessarily need to see this occur to call a recession.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

You cannot invest directly in an index.

Consult your financial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

[1] http://www.investmentnews.com/article/20171006/FREE/171009948/look-for-big-improvement-in-funds-10-year-record

[2] https://www.cnbc.com/2017/10/06/us-stocks-jobs-report-sp-winning-streak.html

[3] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO

[4] https://www.msci.com/end-of-day-data-search

[5] https://www.cnbc.com/2017/10/06/us-stocks-jobs-report-sp-winning-streak.html

[6] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO

https://www.msci.com/end-of-day-data-search

[7] https://www.cnbc.com/2017/09/29/stock-markets-wrap-up-solid-third-quarter.html

[8] http://money.cnn.com/2017/09/29/investing/dow-longest-quarterly-win-streak-20-years/index.html

[9] http://www.marketwatch.com/story/what-rose-in-the-third-quarter-stocks-bondsbasically-everything-2017-09-29

[10] http://www.reuters.com/article/us-china-economy-pmi-official/chinas-factories-grow-at-fastest-pace-in-over-five-years-as-prices-surge-idUSKCN1C5027

[11] http://www.marketwatch.com/story/what-rose-in-the-third-quarter-stocks-bondsbasically-everything-2017-09-29

[12] http://money.cnn.com/2017/09/29/investing/dow-longest-quarterly-win-streak-20-years/index.html

https://www.cnbc.com/2017/09/28/oil-mixed-but-set-for-weekly-gain-on-improving-market-outlook.html

http://wsj-us.econoday.com/byshoweventarticle.asp?fid=483784&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top

[13] https://www.bloomberg.com/news/articles/2017-09-29/kindest-quarter-arrives-for-stock-market-that-nothing-can-rattle

[14] https://www.bloomberg.com/news/articles/2017-09-29/kindest-quarter-arrives-for-stock-market-that-nothing-can-rattle

http://wsj-us.econoday.com/byshoweventarticle.asp?fid=483784&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top

[15] http://wsj-us.econoday.com/byshoweventarticle.asp?fid=483728&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top

[16]  https://www.gsam.com/content/gsam/us/en/advisors/market-insights/market-strategy/market-know-how/2017/Q42017.html