Market Recap – October 2013
Equities eventually managed to build on September's Fed relief rally, thanks to the end of the federal government shutdown, a halt to the debt ceiling impasse, anticipation of further delay in Fed tapering, and generally encouraging Q3 corporate earnings reports. The S&P 500, the Dow industrials, and the small-cap Russell 2000 saw new all-time record closes yet again, while the Nasdaq ended October neck-and-neck with the Russell as the year-to-date leader. The S&P has now risen more than 6% since its low point during the government shutdown, and if the Russell were to end the year where it ended October, it would be the index's fifth best annual percentage gain ever.* With continued healing in Europe, a pickup in Chinese manufacturing, and the postponement of potential Fed tightening, the Global Dow edged out its domestic counterpart, not only for the month but for all of 2013.
Removal of the threat of default on U.S. debt relieved pressure on short-term Treasury bills, bringing the yield back below that of one-year notes, while the 10-year yield remained comparatively stable throughout the month. After spending more than three months above $100 a barrel, the price of oil finally slipped to roughly $96. Gold also slid in October, losing roughly $67 an ounce and ending the month just under $1,350.
The nation's unemployment rate continued to inch downward, hitting 7.2% in September (the most recent data available from the Bureau of Labor Statistics.) That's the lowest since November 2008. However, the 148,000 jobs added during the month fell short of the monthly average for the past year.
The most recent S&P/Case-Shiller 20-City Composite Index reflected the biggest year-over-year gains (nearly 13% in August) in home prices since early 2006, though the pace of those gains has begun to slow over the last several months. Sales of existing homes also showed signs of slowing, falling almost 2% in September, according to the National Association of Realtors®. Because of the federal shutdown, data on new home sales for September and October won't be released until December 4.
Noting the recent slowing of the housing recovery and employment that still hasn't fallen to its target of 6.5%, the Federal Reserve's monetary policy committee has pledged to continue buying $85 billion worth of bonds a month, at least until the Fed's next meeting in December.
The month of December is also now the next foreseeable turning point in the Washington budget battles, a major market mover. That's when a report is due from a joint congressional budget conference established by the agreement that ended 16 days of partial government shutdown and debt ceiling gridlock. The legislation also suspended the debt ceiling through February 7 and provided government funding through January 15.
Markets seem likely to react to that dilemma at a later date, preferring for now to climb a wall of worry and follow September’s momentum.
The performance quoted represents past performance, which does not guarantee future results.This summary represents the views of the portfolio manager as of October 30, 2013. Those views may change, and the Funds disclaim any obligation to advise investors of such changes. The Azzad Funds are self-distributed and available by prospectus only. A free copy of the prospectus, which contains information about the Funds’ risks, fees, and objectives, and other important information, is available at www.azzadfunds.com or by calling 888.350.3369.