Investment Clock insights

A pivotal October: Wall Street sell off


Trevor Greetham

12 October 2018

Another brutal sell off on Wall Street. Trump’s attacks on the Fed don’t help as they make it harder for the central bank to stop the sell off with a pause in interest rate hikes without accusations of caving in to political interference. 
We expect markets to remain volatile, with big swings up and down, for the next month or two. These are likely to continue until after the midterm elections in early November. 
It’s not unusual in the later stages of an economic upturn for stocks to gyrate, selling off on fears of higher interest rates and then rallying on strong earnings reports. A good US earnings season may be the driver of more positive markets later on. Easier policy in China is also likely to help - as would a more conciliatory mood on trade tensions.

Another brutal sell off on Wall Street. Trump’s attacks on the US Federal Reserve don’t help as they make it harder for the central bank to stop the sell off with a pause in interest rate hikes without accusations of caving in to political interference. 

We expect markets to remain volatile, with big swings up and down, for the next month or two. These are likely to continue until after the midterm elections in early November. 

It’s not unusual in the later stages of an economic upturn for stocks to gyrate, selling off on fears of higher interest rates and then rallying on strong earnings reports. A good US earnings season may be the driver of more positive markets later on. Easier policy in China is also likely to help - as would a more conciliatory mood on trade tensions.

Past performance is no guide to the future. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.