- The S&P 500 index posted a total return of -4.9% in Q3, its third straight quarterly loss
- U.S. home prices fell 0.4% in July from June
- The Index of Consumer Sentiment published by the University of Michigan rose to 58.6 in September
Top Three Market Headlines
Another Challenging Quarter for Financial Assets: The third quarter of 2022 proved to be another challenging period for financial assets, with many broad indices extending first-half losses. Brief rallies across stocks and bonds in July fizzled amid slowing economic growth, persistently high inflation, and an aggressive rate-hiking posture by the Federal Reserve. Most U.S. stock market indices posted their third straight quarterly loss (S&P 500 index, -4.9%), while international stocks fared even worse (MSCI EAFE index, -9.3%, U.S.-$ terms). Bonds, meanwhile, struggled as market yields rose throughout the quarter (Bloomberg Barclays U.S. Aggregate index, -4.8%). (All returns quoted on a total return basis.)
Home Price Growth Abated in July: U.S. home prices across broad metropolitan areas fell in July for the first time since March of 2019, as the S&P CoreLogic Case-Shiller 20-City Composite Home Price Index declined 0.4% from June. Prices were still 16.1% higher compared to the prior year, though this represented a deceleration from the 18.6% annual increase in the previous month. The changing trend underscored a cooling in the housing market as mortgage rates continue to climb. According to Freddie Mac, the average rate on a 30-year fixed-rate mortgage in the U.S. hit 6.7% last week, more than double from a year ago.
Consumers' Outlook Improves Modestly: Recent declines in gas prices have modestly improved the outlook of consumers, according to a pair of surveys released last week. The Conference Board Consumer Confidence Index rose in September for the second straight month, clocking 108.0 versus 103.6 in August. Meanwhile, the Index of Consumer Sentiment published by the University of Michigan rose to 58.6 in September, up marginally from 58.2 in August. While survey results improved in September versus the prior month, both measures remain well below mid-2021 levels.