Opening Statement from the October 2021 Dividend Gems

Opening Statement from the October 2021 Dividend Gems

Originally published on October 18, 2021 (pre-market release)

Overview

In the final days of September, the US Treasury 10-year yield began to soar. This put significant downward pressure on the equities market, with the brunt of the impact on the richly valued Nasdaq.  Despite current weakness in the U.S. equities market, Q3 earnings are expected to come in strong.

While the pull back in equities is not surprising, there were really no obvious signs that enabled investors to prepare for the downside. Although painful for those investors who are overweighed in the Nasdaq, this correction is quite healthy given the blistering performance of the indexes through the end of August 2021. 

Inflation data continues to rise around the world. In response bond yields have soared in anticipation of interest rate hikes.

Meanwhile, crude oil prices continue to rally due to widespread production shutdowns in the US in response to damage caused by Hurricane Ida. Crude prices recently reached a 7-year high after OPEC announced its decision to boost November output by only 400,000 bpd, which was on the low side of expectations.

Europe is experiencing an energy crisis fueled by heavy reliance on natural gas without adequate supplies. This could spill over into other parts of the world to cause crude oil pricing to soar from current levels.

Market Overview

The U.S. stock market...