After closing higher in each of the first four months of the year May brought volatility as the S&P 500 closed the month down about 6.5% amid fresh trade concerns. Bonds also flashed a warning sign as the yield on the 10-year US Treasury dropped to around 2.14% at the end of the month, the lowest levels since September, 2017. (Bloomberg).
How quickly things can change. The market’s sharp pull-back in the 4th quarter of last year bottomed in late December as the S&P 500 dropped almost 20% from the September highs.
Another steady month for stocks in March brought the first quarter to a close with the S&P 500 rallying about 13% over the first three months of the year while international stocks also performed well closing the quarter up about 9.5% (MSCI World ex-US, YCharts), albeit both still down from their all-time highs. We are encouraged by the continued recovery of the stock market this year
February brought with it another strong month for stocks as markets continued to rally from the Christmas Eve lows. The S&P 500 finished the month roughly 3% higher which now leaves the index up about 11% for the year, and 18% from the lows in late December, but still about 5% from all-time highs (YCharts).
Investors will think of the last quarter of 2018 for years to come, but they won’t remember it fondly. The Economist described it like this,
Investing during the month of December was like traversing an icy mountain stream. It delivered a staggering shock to the senses that triggered the instinct to, “Get Out!”
Ouch!
It never feels good when the stock market heads south, and that’s what happened last week. The Standard & Poor’s 500 Index (S&P 500), Dow Jones Industrial Average, and Nasdaq Composite all moved into correction territory, which means the indices have fallen 10 percent or more from their previous peaks.
2018 has been a challenging year for investors as volatility returned with a bang after being almost completely absent in 2017 when stocks roared higher by almost 20% as measured by the S&P 500 (YCharts). Through December 14th the S&P 500 is down almost 3% after enduring two corrections of 10%+ throughout the year (YCharts).
We’re off to a slow start.
December is usually the best month of the year for the stock market. It has been since 1950, according to Randall Forsyth of Barron’s, but not so far this year.
Two issues made investors particularly uncomfortable last week which helped trigger a sell-off that pushed major U.S. stock indices lower.
Hold on to your hats!
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