The third quarter began with equities in full, bull-market mode owing to a rebound from post-Brexit declines – declines that notably occurred because so few investors actually expected the Brexit vote to pass. Then, in July and August, generally positive earnings and strong, risk-on appetites produced nice gains.
In September, however, the appetite for risk lessened amid volatility from steeper valuations, weaker economic data and the inherent uncertainty in a presidential race that has been the very definition of the unexpected, with no shortage of surprises. Also weighing on equities in September was the prospect of an interest-rate hike, which investors previously had discounted. Although the Fed left rates unchanged in September, the likelihood of a December rate hike rose sharply, dampening investors’ moods. Another unexpected turn came at month’s end, when oil prices surged after OPEC leaders agreed to cut production. Continue Reading »