(22 October 2023) Stocks sold off last week as continuing geopolitical tensions conspired with interest rate worries after Fed Chair Powell reasserted his view that rates would be higher for longer in order to tackle inflation. The S&P 500 fell more than 2% on the week to 4224 while the Nasdaq-100 lost almost 3% to 14,560. This bearish outcome was unexpected as I thought the early week gains on the Sun-Uranus and Jupiter-Pluto alignments might have offset the downside potential of the midweek Sun-Mercury-Ketu conjunction. While we did get some upside on Monday, the rally stalled on Tuesday and this set the stage for the second half weakness on the Ketu influence.
Even if the Israel-Hamas war grabs most of the headlines, the market may be more closely focused on the relentless rise in bond yields. The benchmark 10-year Treasury pushed higher again last week and almost reached the key 5% level closing at 4.93%. Higher yields are bad news for stocks as the higher cost of borrowing reduces credit and limits economic expansion. While higher oil prices and a robust labor market are keeping inflation expectations elevated, the rising yields may also be the result of simple supply and demand. It has been reported that China has been selling more of its holdings of Treasuries in recent weeks while the US government seems intent to racking up ever-larger deficits in order to pay for military actions in Ukraine and now Israel. The prospect of ballooning deficits means the US will be forced to sell more bonds which may well drive up rates as demand may not be sufficient to absorb fresh supply. The result may be a continued cratering of the bond market and ever-higher rates. Until yields reverse lower, stocks will stay under pressure.
The planetary outlook is mixed. Despite last week’s sell-off, the outlook for October suggests that choppy price action is more likely than a major decline. While the influences look quite bearish over the next 4-8 weeks, the near term outlook for rest of October is sufficiently mixed that we could see a rally attempt. The progressions calendar leans bullish for this week upcoming (+4) while the transits are mixed. Some early week weakness is possible on the Sun-Saturn alignment but bullish Jupiter is due to form aspects with Venus (Oct 21), Mars (Oct 28), Mercury (Oct 29), the Sun (Nov 3) and Neptune (Nov 5).
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Photo Credit: Richard Cawood
