Where are we today?

Sources: Bloomberg and Wells Fargo Investment Institute. Monthly data from January 1, 2013 to September 30, 2022. Consumer price inflation: monthly data from January 1, 2013 to August 31, 2022. The S&P 500 Index is a market capitalization-weighted index composed of 500 widely held common stocks that is generally considered representative of the U.S. stock market. The Consumer Price Index measures the average price of a basket of goods and services. West Texas Intermediate (WTI) is a grade of crude oil used as a benchmark in oil pricing. U.S. Dollar Index (USDX) measures the value of the U.S. dollar relative to the majority of its most significant trading partners. This index is similar to other trade-weighted indexes, which also use the exchange rates from the same major currencies. An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results. Stocks may fluctuate in response to general economic and market conditions, the prospects of individual companies, and industry sectors.

Key Takeaways

  • The U.S. stock market fell to new lows in the third quarter as the market digests still elevated inflation, aggressive Federal Reserve monetary policy, and expectations for an economic recession.
  • U.S. dollar strength likely will persist for now, pressuring commodity prices lower. However, we believe price declines will be limited by tight supply conditions tied to a commodity super cycle reacting to years of underinvestment.