2 min

October 2022 Market Update

Nov 15, 2022
in a nutshell
  • Unemployment rates dropped to a historic low of 3.5% and food prices declined for the first month since May 2021.
  • The U.S. dollar value sits at a two-decade high.
  • The US economy grew 2.6% last quarter, and some key components of inflation (like rent) began cooling off.
Image of Your monthly round-up of market updates and what it means for your long-term financial wellness for October 2022.
in a nutshell
  • Unemployment rates dropped to a historic low of 3.5% and food prices declined for the first month since May 2021.
  • The U.S. dollar value sits at a two-decade high.
  • The US economy grew 2.6% last quarter, and some key components of inflation (like rent) began cooling off.

October resulted in a two-decade-high value for the U.S dollar, while unemployment rates dropped to a historic low. We have your October market updates rounded up below. 

In the Markets

  • The rally in stocks in early October was cut short after hotter-than-expected jobs numbers signaled to investors that the Fed likely won’t stop hiking rates to tame inflation.

  • Unemployment rates, in particular, dropped to a historic low of 3.5%.

  • The U.S. dollar value sits at a two-decade high.

  • New inflation numbers came in hotter than expected in mid-October, with prices increasing 8.2% in the past 12 months. 

  • Food prices declined for the first month since May 2021.

  • Energy prices fell for the third month in a row on the back of lower gas prices.

  • Stocks rallied at the end of October as earnings season — when companies report their financial results from the last quarter — got off to a strong start.

  • A fresh batch of earnings from Meta, Amazon, and the rest of big tech came in lower than Wall Street expected.

  • The US economy grew 2.6% last quarter, and some key components of inflation (like rent) began cooling off.

What does a strong dollar mean for you?

The dollar started rising at the beginning of the year. In January, $1 was worth 115 Japanese yen. Today, the same dollar gets you about 145 Japanese yen.

What this means for you: First, the good: a trip to Europe or Asia costs up to 20% less than it would have last year. It’s also cheaper for companies to import goods from abroad (like bananas from Honduras, or electronics manufactured in China).

But, on the flip side for investors, a strong dollar hurts the profits of U.S. companies that make money internationally. Investors will be watching to see how companies adjust in the upcoming earnings season.

Why you should care: The Fed has two jobs: maintain maximum employment and keep inflation in check. If a strong dollar weakens the labor market, the Fed may rethink future rate hikes. And, for investors, just the idea of fewer rate hikes can push stock markets higher.

How to Invest in a Volatile Market

A strategy worth considering no matter what the future holds is diversification, or spreading your investments out across different types of assets (like stocks and bonds). Diversification can help smooth out the risk to your portfolio when one type of asset hits a rough patch. 

Do you know how diversification works? Test your knowledge!

True or false: My portfolio is diversified because I own lots of assets.

False! Just owning a lot of assets doesn’t mean your portfolio is diversified. Instead, the goal of diversification is to mix it up — in other words, don’t just own a lot of assets, own a lot of different types of assets.

Here’s why: With a diversified portfolio, you’re not relying on the performance of just one thing. When one type of asset goes down, another could be going up. The result? Generally, a less volatile portfolio.

Multiply this example across the hundreds or even thousands of stocks or bonds that can be found in exchange-traded funds (ETFs) — like the ones found in your Acorns portfolio — and you’ve got diversification!

Holding a mix of assets can help you weather bumpy markets like the ones we saw in September, with the goal of setting your portfolio up for a better chance of success in the long term.

And with Acorns Invest, we’ll diversify your portfolio for you, based on your risk profile.

To learn more about it, check out your Portfolio in the Acorns app. Not an Acorns user? Sign up in under 5 minutes here

Important Disclosure:

This information is for educational purposes only and should not be considered investment advice or a recommendation to buy or sell any particular security, strategy, or investment product.  Neither diversification or dollar cost averaging can ensure a profit or protect against losses.  It involves continuous investing regardless of fluctuating prices levels.  The example discussed is intended to represent a generalized and basics theory of diversification.  

This material has been presented for informational and educational purposes only. The views expressed in the articles above are generalized and may not be appropriate for all investors. The information contained in this article should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. There is no guarantee that past performance will recur or result in a positive outcome. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions. No level of diversification or asset allocation can ensure profits or guarantee against losses. Article contributors are not affiliated with Acorns Advisers, LLC. and do not provide investment advice to Acorns’ clients. Acorns is not engaged in rendering tax, legal or accounting advice. Please consult a qualified professional for this type of service.

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