Last week, domestic markets had some of their worst performance in 10 years. The S&P 500 lost 7.05%, the Dow declined 6.87%, and the NASDAQ dropped 8.36%. All three indexes have now lost at least 8% in 2018. On Friday, December 21, the NASDAQ entered a bear market, which means it’s at least 20% below its last record high. Meanwhile, the S&P 500 and Dow both finished the week close to bear markets, too. Internationally, stocks in the MSCI EAFE also struggled, posting a 2.67% weekly loss.
What happened to the markets?
Last week brought a number of economic updates, which gave mixed signals on the economy:
However, markets hardly focused on the data. Instead, two key headlines drove the week’s performance: 1) results from the Fed’s latest meeting and 2) the risk of a government shutdown.
Let’s look a bit more into what happene and how the markets reacted.
Markets expected the Fed’s 4th interest rate increase for the year. In many ways, traders were trying to read between the lines of every Fed announcement last week to see how sensitive the agency would be to the markets. As a result, investors became concerned about the Fed’s statements that increases could continue in 2019, despite seeing a slowdown in economic growth. This reaction caused some of the sell-offs.
A disagreement between Congress and President Trump about government funding for a border wall continued throughout last week. While a deal had seemed imminent, by Friday afternoon, the political divide continued and a shutdown loomed. Stocks dropped significantly as a result. By Saturday morning, 9 of the 15 federal departments had closed due to the shutdown.
What should you do?
These challenging moments are when keeping perspective is most important. Sell-offs and uncertainty can feel worrisome and we cannot say for sure how long this market turbulence will continue.
In the weeks ahead, the government shutdown may continue, and we may not experience the strong “Santa rally” that investors hoped for. However, it’s important to remember that, historically, shutdowns are short and don’t typically create negative long-term effects on the economy.
However, when thinking about the current environment, we want to encourage you to consider airline turbulence: During a flight, turbulence can feel unsettling and downright scary. But, you don’t jump out of the plane just because it’s shaking. While you may worry about a crash, the pilots are using every available data point, measurement, and expert to find the safest path to your destination. The unpleasantness almost always calms and you arrive where you intended to go.
In this same manner, we’re tracking this current turbulence and how it relates to you. No matter what lies ahead, we’re here to pilot you through. If you want to discuss specifics about our economy, your goals, and current momentum, please contact us. We’re always ready to help you understand your financial life.
Monday: NYSE Early Close
Tuesday: Markets Closed for Christmas Day
Thursday: New Home Sales, Consumer Confidence, Jobless Claims
Friday: Pending Home Sales Index
Share the Wealth of Knowledge!
Please share this market update with family, friends, or colleagues.
If you would like us to add them to our list,
simply click on the “Forward email” link below. We love being introduced!
If you would like to opt-out of future emails, please reply to this email with UNSUBSCRIBE in the subject line.
The content of this article is for informational purposes only and is not intended as an offer of investment advice, investment strategy or to buy, transfer or sell any security or other investment vehicle. Information contained herein has been obtained from sources deemed reliable but Spire Wealth Management LLC, Spire Securities LLC and their affiliates, including Compass Asset Management Group LLC, do not guarantee its accuracy. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions of Spire Wealth Management LLC, Spire Securities LLC or its affiliates.
Spire Wealth Management LLC is a federally Registered Investment Advisor. Securities offered through an affiliate, Spire Securities LLC. Member FINRA/SIPC
By accessing any links contained in this article you will be leaving Spire Wealth Management LLC & its affiliates and Compass Asset Management Group LLC websites and entering a website hosted by another party. Although Spire Wealth Management LLC & its affiliates and Compass Asset Management Group LLC have approved these as reliable partner sites, please be advised that you will no longer be subject to, or under the protection of, the privacy and security policies of Spire Wealth Management LLC & its affiliates Compass Asset Management Group LLC websites. The other parties are solely responsible for the content of their websites. We encourage you to read and evaluate the privacy and security policies on the sites you are entering, which may be different than those of Spire Wealth Management LLC & its affiliates Compass Asset Management Group LLC.
Diversification does not guarantee profit nor is it guaranteed to protect assets.
International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.
The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.
The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indices from Europe, Australia, and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
By clicking on these links, you will leave our server, as the links are located on another server. We have not independently verified the information available through this link. The link is provided to you as a matter of interest. Please click on the links below to leave and proceed to the selected site
Tags: #CompassAMG, Bear Market, DJIA, Dow, Fed Interest Rate, Government Shutdown, NASDAQ, S&P500