top of page

October Economic Update

  • Bob Lawson
  • Oct 7, 2020
  • 3 min read

Market Summary

After two months of gains, stocks pulled back over the course of last month. In addition to generally over-bought market conditions, investors paused over concerns of stalled fiscal stimulus negotiations in Washington, volatility for the upcoming election, and new coronavirus cases emerging in Europe. The S&P 500 Index slipped 3.92%, the Nasdaq declined 5.16%, and the Dow Jones ended the month down 2.28%. (1)

Notably, the Nasdaq which rallied strong in August, led the major market indices in declines as investor sentiment turned negative. This can largely be attributed to apprehensions regarding high stock valuations relative to future earnings, over-bought conditions, and growing concerns that growth technology companies may have to service their long-term debt in an environment which has struggled to promote inflation. These longer-term debt obligations would typically be discounted into stock valuations by analysts who adjust for the value of money for future debt payments. In a low inflationary or deflationary environment, companies must pay higher costs than initially anticipated for these future loan payments.


The Federal Reserve & Economic Releases

Each announcement by the Federal Reserve is closely watched and dissected by investors and fund managers alike. In September, the Fed signaled that interest rates would likely not increase until 2023, with inflation struggling to reach their threshold of an average of 2%. Fed officials also stressed the importance of additional fiscal stimulus to spur inflation, reduce the number of foreclosures and evictions, and to generally encourage consumer spending.


One positive note announced by the Federal Reserve was their adjusted outlook for unemployment, predicting that it would average between 7 and 8 percent in the final three months of the year. Previously, officials had forecasted higher unemployment levels between 9 and 10 percent in the final months of the year. (2)


There were other bright spots last month amid the stock pullback, including a 1.8 percent increase for durable goods orders and industrial production output rising 0.4 percent. While these levels remain well below pre-COVID numbers, they are signs that economic production is steadily improving in these areas. (3,4)


Forward Outlook...

In recent days we have witnessed a presidential debate like no other, a sitting President contracting COVID-19, and continued anticipation for an economic stimulus package to be approved by congress. While still shy of all-time highs, stocks have rebounded from their recent pullback amid the turmoil. Nonetheless, we can surely expect more stock “dips and rips” in the months to come as the election approaches. As always, we remain vigilant in monitoring these changing conditions to manage our portfolios.


We wish you and your family continued health and hope that you are will get outside to enjoy the beauty of fall and the last days of t-shirts and shorts (at least for those of you in the Midwest).


Monthly Financial Tip:

Always explore the alternatives before you make a big-ticket purchase. A few minutes of online searching may bring you exactly what you want (or close) at considerable savings.

Citations:

1. The Wall Street Journal, September 30, 2020

2. The Wall Street Journal, September 16, 2020

3. The Wall Street Journal, September 15, 2020

4. The Wall Street Journal, September 25, 2020

Disclaimers:

This post has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Bob Lawson is not engaged in rendering legal or accounting services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.


 
 
 

Comments


Financial Plan | Personalized Report | Financial Advisor - Minneapolis

Barrington's Financial Blog

MRFC - PHOTOSHOP 151x104.png

About   |    Our Services   |    Financial Planning   |    Employer Retirement Plans   |    Contact

Litigation Support   |    Expert Witness   |    Pro Bono Services   |    Careers       

Barrington Capital Management, Inc.

3800 American Blvd West   |   Suite 1500

Bloomington, MN  55431

952-835-1000   |    800-741-0704   

Info@BarringtonCap.com

 

Barrington Capital Management, Inc. only conducts business in states and jurisdictions where it is registered or where an exemption from registration exists. This site and its contents do not constitute investment advice or a solicitation to sell securities. Past performance is not indicative of future results. This website is for informational purposes only and Barrington Capital Management, Inc. reserves the right to modify it at any time without notice. Copies of Barrington Capital Management Inc.’s Form ADV Part 2 are available upon request. Images and photographs are included for the sole purpose of visually enhancing the website. No photographs are of current or former clients and they should not be construed as an endorsement or testimonial from any of the persons in the photograph.

All materials used on this site, including all images, are copyrighted and are protected worldwide by copyright laws and treaty provisions. They may not be copied, reproduced, modified, published, uploaded, posted, transmitted, or distributed in any way, without Barrington Capital Management Inc.'s prior written permission.

Neither Barrington Capital Management, Inc., nor any of their Investment Adviser Representatives, provide tax or legal advice. Tax and legal advice should only be obtained from a qualified professional. All written content on this site is for informational purposes only. All information and ideas should be discussed in detail with an advisor prior to implementation. Examples from our news feeds, blogs or articles do not take into consideration commissions, investment management fees, miscellaneous transaction fees, tax considerations, or margin requirements, which are factors that may significantly affect the economic consequences of a given strategy. Investors should review transaction costs, margin requirements and tax considerations with their financial or tax advisor before entering into any investment or financial planning strategy. Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness.

Investment Advisory services are offered by Barrington Capital Management, Inc., a Registered Investment Adviser in the state of Minnesota. Barrington Capital Management, Inc. may utilize the services of First Ascent Asset Management, LLC for certain investment portfolios. Insurance products and services are also offered through Barrington Capital Management, Inc., a licensed insurance agency. 

Disclosure: Barrington Capital Management, Inc. is not a law firm. Robert D. Lawson and his associates are not practicing attorneys. The scope of any activities performed by Robert D. Lawson, subcontractors or employees of Barrington Capital Management, Inc. is limited to litigation consulting and litigation support. 

By using this website, you agree to our Terms of Service and Privacy Policy. View our Business Continuity Plan.

Copyright © 2025 Barrington Capital Management, Inc.

A Registered Investment Adviser  |  All Rights Reserved

 

bottom of page