Market Minute - November 19, 2018

by Scott Rosenquist, CFA

Market Volatility

The month of October brought volatility back to the market as the major equity indices posted negative returns for the month.  This was also seen internationally, as developed and emerging markets were also negative for the month.  Investors were left wondering what caused the spike in volatility and will it continue?

A few reasons for the selloff could include rising interest rates, tariffs, and slowing earnings growth.  There is uncertainty regarding all these topics and that has led to increased volatility.  The large U.S. technology companies also saw their shares pull back in October after strong year to date performance.  How does this stack up historically?

The chart below from JPMorgan shows the number of days the S&P 500 has seen daily moves of 1% in either direction.  Please note this chart is through September 2018.  The S&P 500 had 10 days in October with moves greater than 1% taking the total for the year to 46.

 

Yield Curve Graphic.png

 

This chart shows that the average number of days in a year where the market (S&P 500) moves one percent up or down is 62 days.  It also shows just how low the volatility was last year with only eight days with a one percent move.  2017 was an outlier in that respect and market volatility has started to revert towards the longer-term average.  The market could continue to show volatility as the future path of interest rates is debated along with the ongoing trade conflicts.  A diversified portfolio can help investors ride out the short-term volatility and stay invested for the long term.

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for any individual. Although general strategies are revealed, this post is not intended nor does it reflect transactions within any one account. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All data and information is gathered from accurate sources but is not warranted to be correct, complete or accurate. Investments carry risk of loss including loss of principal.  Past performance is never a guarantee of future results.

This presentation includes charts and reports provided by third-party unassociated providers and is believed to be reliable but no representation is being made as to its accuracy or completeness.  All investments carry a certain degree of risk including the possible loss of principal and there is no assurance that an investment will provide positive performance over any period of time.  Past performance is no guarantee of future results.

 

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