Mid-Month Update
Headlines & Highlights
- Inflation rises in September: The latest Consumer Price Index (CPI) reading showed that U.S. prices in September were 3.7% higher than they were in the same month last year, with higher gasoline costs driving half of the increase. The latest numbers were a bit above expectations and come after steady results around 3.4% from June to August. Core CPI, which excludes food and energy, came in at 2.6%, just above expectations. Food prices were flat for the month, suggesting that record-high diesel fuel prices are not yet pushing grocery prices higher.
- Iran widens target set in war: Iran is focusing more of its military capabilities on striking oil tankers and other vessels in the Persian Gulf in the regional war that started more than seven months ago. According to monitors, roughly 15 ships have been attacked in the past week, which is close to the same number for the entire month of September. The Houthis, Iran’s allies in Yemen, have increased the intensity of their attacks on Saudi oil and civilian targets. Brent crude has climbed from $98 per barrel to as high as $106 (+8%) so far this month.
- U.S. bull market turns four: The current U.S. bull market for stocks reached its fourth birthday on October 12 just below the S&P 500 Index’s all-time high, reached a few days earlier, when the September CPI report shaved more than 1% off the index. Month to date, the iShares ETF tracking the S&P 500 is up 0.9% (+13.8% year to date) while the more inflation-sensitive iShares ETF for U.S. small caps is down 2.4% in October (+10.9% YTD). International shares are down this month, in part due to a stronger dollar. Yields on the 10-year Treasury rose as high as 5.3% in early October before retreating this week as nervous investors sought out safer assets.
Chart of Interest
Key Takeaways
- Gasoline prices climbed 9.1% in September, according to the Labor Department’s CPI report, as the upswing in hostilities in the Persian Gulf region drove up global crude-oil prices. The September escalation at the pump was more than double the 3.9% increase in August. According to AAA, the national average price for regular is now $4.33.
- The Iran War to date has directly cost the average U.S. household more than $1,600, according to a tabulation by Moody’s Analytics. Roughly two-thirds of the amount was attributed to higher fuel costs – gasoline is up 40+% since late February while diesel and jet fuel are close to 70% higher. The other third is the impact of higher interest rates.
- The S&P 500 bull market’s cumulative total return (including dividends) as of its fourth birthday was 131%, which averages out at about 23% per year. This is more than double the index’s average annual return over the past century. Four other bull markets over the past 50 years have lasted longer and generated a higher cumulative result.
- U.S. manufacturing output grew for a ninth straight month in September despite challenging supply-chain conditions, according to the Institute for Supply Management (ISM). It is the longest such stretch of expansion since the 2022 post-pandemic revival period. ISM’s report said new orders picked up pace and factory employment levels built on gains posted in July and August.
- Initial jobless claims were at 197,000 in the latest report from the federal Labor Department. It was the fourth straight week of fewer than 200,000 filings, the longest such streak since 1969. The four-week average for continuing unemployment benefit claims has dipped to its lowest level since 2023, underscoring the strength of the U.S. labor market.
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