Market Views

JUL 2021

US equity markets continued higher in the second quarter with several key indexes setting new highs in late June. The Standard & Poor’s 500 Index returned +8.6% during the quarter to bring the year-to-date return to +15.2%. Most other indexes produced more modest returns during the three-month period as investors seemed to rotate between sectors in search of undervalued companies. For example, small-capitalization stocks only returned +4.3% and a popular China index returned –0.4% during the quarter.

APR 2021

The stock market’s upward trajectory moderated as the Standard & Poor’s 500 Index returned +6.2% during 2021’s first quarter. Many of the large technology company stocks that led the market’s 2020 rebound sat out the first quarter of 2021. Stocks from the previously underperforming sectors of energy and financials shined. As the Market Indicators chart to the right shows, mid-capitalization and small company stocks had a particularly good quarter. The 12-month performance for all equity indexes is impressive. However, those gains include recovering from the market plunge that preceded the period’s start.

JAN 2021

US stocks continued to move higher during 2020’s last quarter, with the S&P 500 Index and the Dow Jones Industrials returning 12% and 11%, respectively. Small and mid-capitalization stocks were even stronger, returning 31% and 24% during the quarter. All equity indexes produced attractive returns in 2020 (see Market Indicators box). However, those annual returns conceal the story of a rapid, deep bear market and the subsequent 68% S&P 500 rebound.

OCT 2020

The US stock market continued to rebound in July and August before declining slightly in September. For the third quarter, the Standard and Poor’s 500 Index returned +8.9% bringing 2020’s year-to-date return to +5.6%. The S&P has outperformed almost all other broad indexes, including the Dow Jones Industrial Average, which returned –0.9% for the year-to-date period. Most other important equity indexes have also produced single digit percentage declines this year (see Market Indicators box).

Interest rates were essentially unchanged during the quarter as global central banks continued to provide economic stimulus through abnormally low rates. Since year-end, the 10-year US Treasury yield has declined from 1.92% to 0.69%.

JUL 2020

Equity markets rebounded in the second quarter as COVID-19 infection rates slowed in many of the hardest hit areas. Very low interest rates have encouraged investors to buy stocks. The rebound was uneven, favoring technology companies. The future path of economic growth and equity prices are highly uncertain due to the unprecedented response to the COVID-19 pandemic and the search for a successful vaccine.

APR 2020

Stocks suffered severe declines during the first quarter as the new coronavirus, Covid-19, spread in China, Iran, Europe and then the US. With “social distancing” as the primary method of fighting the spread of Covid-19, economic activity slowed markedly in the affected areas. No one knows how long it will take to stop the spread of the virus. The medical, research and financial resources of the US and other major nations are focusing on increasing testing, developing treatments and a vaccine, and providing financial support for individuals and companies affected by the economic downturn. The exact course forward is uncertain but we remain convinced that Covid-19 will be contained and eventually eradicated.

JAN 2020

Last year was a great year for the stock market, and a good year for bonds. The US economy continued to grow, though its growth was on the slow side. While 2019’s rate of stock market gain is too good to continue, we have a positive outlook as we enter 2020. We believe that many investors are too pessimistic about the stock market.

OCT 2019

An uncertain global growth outlook and a briefly inverted yield curve held the US stock market close to flat during the third quarter. Interest rates dropped sharply during the quarter before staging a partial rebound. As fears of a recession increase, the resilient American consumer is keeping the economy moving forward.

JUL 2019

US equities started the second quarter by continuing the powerful rebound that began in the last week of December. The market, as measured by the Standard & Poor’s 500 Index, set new highs at the beginning of May. Economic growth concerns led to a market sell-off later in the month followed by a rapid rise and new all-time highs in response to the Federal Reserve’s signals that further interest rate increases were on hold. For the first six-months of 2019, the S&P 500 returned +18.5%. Stocks of smaller and international companies returned somewhat less. Details are found in the near-by Market Indicators chart.

APR 2019

In the first quarter of 2019, US stocks continued a rebound that began in the last few days of December. As measured by the Standard & Poor’s 500 Index, stocks returned +13.7% for the quarter and recovered all but 3.3% from the highs of late September 2018. Small company and international indexes also rebounded. Details are shown in the Market Indicators box to the right.

JAN 2019

Increased uncertainty caused equity markets to end the year on a weak and volatile note. US economic growth is healthy but fragile as headwinds develop and the risks of a slowdown increase. We discuss the effects of the rapid growth of corporate debt. Although hard to do in difficult markets, we believe the discipline of adhering to long term allocation targets will benefit investors in the long run.

OCT 2018

The US stock market jumped to record highs during the third quarter. The advance was driven by strong earnings growth and continued economic expansion. The Federal Reserve continued their plan of gradual rate increases. Major changes were made to the Standard and Poor’s economic sectors at the end of the quarter.

JUL 2018

US equity markets produced attractive returns in the second quarter. The Federal Reserve increased short-term interest rates. Trade tariff rhetoric escalated but thus far actual tariff implementation has been limited.

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