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Weekly Market Recap | 10/16/23

What happened last week

  • Stocks close the week higher despite mounting geopolitical concerns and rising long-term interest rates.
  • Bond market volatility driven by the Middle East situation and government auctions drove day-to-day price action.
  • Inflation dynamics gleaned from last week’s CPI report left Fed pricing mostly unchanged.

What we’re watching this week

  • This week’s Treasury auctions are a catalyst for another leg higher in long-term interest rates.
  • Developments out of the Middle East for signs of Iranian intervention.
  • Earnings (~13% of the S&P 500 this week), but the major one is next week, with roughly half of domestic large caps reporting.

Horizon’s Investment Management Views

Last week, volatility in the bond market once again dominated price action in stocks. The week kicked off with a knee-jerk bid to Treasuries and other safe havens as fears of a broader conflict in the Middle East took hold. Investors judged that lower yields were positive for equities and propelled stocks to three straight days of gains. However, the positive mood came to a screeching halt on Thursday as a poorly subscribed 30-year Treasury auction led to the largest surge in bond yields since September last year. The poor Treasury auction also drove a sell-off in equities, but despite this, stocks closed the week higher, buffeted by strong gains earlier in the week.

The difficulty of pricing financial assets in an uncertain interest rate environment coupled with a tense geopolitical situation was not enough to drive stocks lower on the week. Although volatility in the Treasury market and safe haven flows can drive the day-to-day moves in markets, longer-term trends continue to firmly support risk assets. US economic strength, continued progress towards 2% inflation (the CPI report last week did not meaningfully change the outlook), and stabilization of China’s economy can all continue to buttress equities despite mounting uncertainty. We are keenly focused on the 20-year Treasury auction this week and news flow out of the Middle East for near-term direction.

Earnings season is another event on our radar; a few mega-banks kicked it off last week with some good reports. However, it will not start in earnest until next week as ~40% of the S&P 500 and ~50% of the NASDAQ 100 are expected to report. Company fundamentals may be the catalyst that tips the scale between the bullish or bearish case in the near term and sets the tone for the rest of the fourth quarter. The bottom line is that markets have real upside and downside risks in the last few months of 2023.


CPI = Consumer Price Index. The commentary in this report is not a complete analysis of every material fact in respect to any company, industry or security. The opinions expressed here are not investment recommendations, but rather opinions that reflect the judgment of Horizon as of the date of the report and are subject to change without notice. Forward looking statements cannot be guaranteed. We do not intend and will not endeavor to provide notice if and when our opinions or actions change. This document does not constitute an offer to sell or a solicitation of an offer to buy any security or product and may not be relied upon in connection with the purchase or sale of any security or device. Before investing, an investor should consider his or her investment goals and risk comfort levels and consult with his or her investment adviser and tax professional. Equities are represented by the S&P 500 Index which is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. Small-cap stocks are represented by the S&P 600 Index which covers roughly the small-cap range of American stocks, using a capitalization-weighted index. References to indices, or other measures of relative market performance over a specified period of time are provided for informational purposes only. Reference to an index does not imply that any account will achieve returns, volatility or other results similar to that index. The composition of an index may not reflect the manner in which a portfolio is constructed in relation to expected or achieved returns, portfolio guidelines, restrictions, sectors, correlations, concentrations, volatility or tracking error targets, all of which are subject to change. It is not possible to invest directly in an index. This commentary is based on public information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Horizon Investments and the Horizon H are registered trademarks of Horizon Investments, LLC.

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