Quarterly Market Summary and Outlook – October 2022

The government shutdown proved to be a far greater drag on the economy than earlier estimates indicated. On Friday, the U.S. BEA reported that fourth-quarter Gross Domestic Product (GDP), the largest measure of economic output, grew at a 1.4% annualized pace. This compares with a 4.4% annualized pace in Q3.

The US Bureau of Labor Statistics published its final benchmark revisions covering employment during the 12‑month period between April 2024 and March 2025. The revisions showed that payrolls were revised lower by 898,000 jobs compared with the originally reported figures.

After leading markets for much of the past two years, AI, tech stocks, and software specifically, are losing leadership in early 2026, as investors rotate capital toward other sectors, including energy, industrials, and defensive sectors.

The so-called January Barometer holds that the market’s performance in January—measured by the S&P 500 Index—tends to foreshadow how stocks will perform during the year. Since 1970, January finished higher 33 times and fell 23 times, excluding this month’s increase of 1.37% (MarketWatch data, excludes reinvested dividends).

Much has been made of the sluggish hiring environment, but less attention has been paid to an important counterpoint: the persistently low level of layoffs. Figure 1 highlights the number of individuals who go online or head to their respective state’s unemployment office and file for benefits following a layoff.