The stock market has been preoccupied with the number five of late, and not for reasons that typically make it a subject of fascination. Five plays a key role in many of the world’s religions, while for math nerds, it isn’t just the third prime number but also the first of the so-called “sexy primes”—separated from 11, another prime, by six. In numerology, five is linked with “change, evolution, love, and abundance.
All of the tumult is understandable. After all, the Federal Reserve has moved the federal-funds rate up by 5.25 percentage points since March 2022, at the fastest clip in more than 40 years, while the 10-year yield has surged 1.64 percentage points from its lowest point of the past six months. But investors may be getting themselves worked up over nothing.
The job market is still strong—first-time unemployment claims came in below 200,000 in the most recent report—while economists expect third-quarter U.S. gross-domestic-product growth to come in at 3.3% when it is released on Thursday. The Atlanta Fed’s GDPNow model puts it at 5.4%.While it would be a mistake to dismiss the macroeconomic and geopolitical concerns now weighing on markets, overestimating their significance could also be detrimental to an investment portfolio.
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