October Market Recap | Personal Capital
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Home>Daily Capital>Investing & Markets>October Market Recap: Solid Start to Earnings Season

October Market Recap: Solid Start to Earnings Season

A solid start to earnings season helped investors overlook inflation fears and challenges in China. After experiencing the first down quarter since the initial pandemic sell-off, U.S. stocks quickly rebounded and are once again posting new all-time highs. Growth led the way, with mega cap companies Microsoft, Alphabet and Tesla booking large returns. Bonds were flat overall, as the yield curve flattened.

Profit margins overall continue to expand despite supply chain issues, rising labor costs and higher commodity prices, suggesting companies have been able to successfully pass on pricing to consumers. With inflation risk capturing more and more headlines, the Fed announced it will begin tapering bond purchases this month. Expectations for the first interest rate hikes are split between mid-to-late 2022 and 2023. While the concepts of tapering and rate increases are garnering much attention, we note that the Fed will still be conducting a large amount of asset purchases for some time, and rates are expected to remain below 1% for at least the next year or two.

Corporate Tax Rates

A quiet but potentially powerful bullish factor this month was fading support for raising corporate tax rates as part of the proposed infrastructure stimulus package. Corporate rates are expected to increase from 21% to 26.5%. This would be a direct reduction in earnings available to shareholders. If this increase is not included in the final legislation, it could help fuel an end-of-year rally.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Craig Birk leads the Personal Capital Advisors Investment Committee and serves as Chief Investment Officer. His focus is translating improvements in technology into better financial lives. Craig has been widely quoted in the Wall Street Journal, Bloomberg, CNN Money, the Washington Post and elsewhere. Prior to Personal Capital Advisors, he was a leader within the portfolio management team at Fisher Investments, helping assets under management grow from $1.5 billion to over $40 billion. Craig graduated from the University of California at San Diego and has earned the Certified Financial Planner® designation.
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