Happy July! I hope you are enjoying your summer. We have faced a great deal this year to say the very least! But I truly believe brighter days are ahead and good things will come.
Despite what the media tells us, I wanted to breakdown and highlight some important market news!
At the start of the COVID-19 pandemic the U.S. stocks fell about 35% in less than six weeks and the longest economic expansion in history came to an end. Most felt that investment gains had not only come to a screaking halt but we wouldn’t see positive returns for a while. Coupled with this unemployment rates quickly soared as business were forced to close.
At the heart of our American culture is the desire to maintain a sense of purpose and forge ahead with hard-work and determination.
President Abraham Lincoln sent a letter to Congress in 1862, during one of the most tumultuous times in our nation’s history. Lincoln wrote, “The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty and we must rise with the occasion. As our case is new, so we must think anew and act anew.”
During the current crisis, Americans and the world rose to the occasion. Within weeks of the unfolding crisis, governments passed massive stimulus packages. Researchers at universities and companies joined the fight, using advances in genetics and artificial intelligence to develop tests for the virus that just weeks before was largely unknown. Recently, both potential treatments as well as possible vaccines have been developed and have shown promise in trials. If these don’t work, there are more behind them.
Advancements in technology made it possible for many, including our practice, to move to working from home efficiently and seamlessly.
Given the collective power of these efforts, investment markets staged a powerful recovery. The Dow Jones Industrial Average and the S&P 500 turned in their best quarterly performance in decades. Even though both indices remain down somewhat for the calendar year, these are the best quarterly performances since 1987 and 1998 respectively.
- The S&P 500 jumped to a 20.5% gain as government stimulus and medical advances strengthened markets.
- For the calendar year, the S&P 500 and the Russell 2500 were still down 3.1% and 11.1% respectively. While still down, it is a far cry from the worst-case scenario many expected just three months ago.
International Equity: Foreign stocks also participated in the quarter’s recovery, though somewhat more muted than U.S. returns.
Fixed Income: Late in the first quarter, the Fed cut the discount rate to zero. This was followed by a variety of programs to inject liquidity into the fixed income markets.
- The Barclays Aggregate, a measure of the total bond market, rose 2.9% for the quarter and is up 6.1% for the calendar year.
- High-yield bonds turned in strong results for the quarter despite the current challenges. The index jumped 10.2%for the quarter but given the weak results from the first quarter, remains down 3.8% for the year.
Of course, a dramatic rebound from the lows of the first quarter doesn’t mean this is all over. Unfortunately it is not and there is certainly more volatility to come, including the impacts related to the upcoming elections.
What I know more than anything is it’s not JUST about market returns, investment portfolio, and asset allocation. It is about YOU … your goals, values and desires to live the life you want! It’s about your plan and your path… Let’s begin Planning with Purpose!
If you have any questions, or want to learn more about Planning with Purpose we are here for you, never hesitate to call!
LFS – 3177941-072720
Sources of data –Wall Street Journal, CNBC, Abbott Laboratories, Thermo Fisher Scientific, Moderna Pharma, S&P Global, MSCI, Russell. The performance of an unmanaged index is not indicative of the performance of any particular investment. It is not possible to invest directly in any index. Past performance is no guarantee of future results. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Three-year performance data is annualized. Bonds have fixed principal value and yield if held to maturity and the issuer does not enter into default. Bonds have inflation, credit, and interest rate risk. Treasury Inflation Protected Securities (TIPS) have principal values that grow with inflation if held to maturity. High-yield bonds (lower rated or junk bonds) experience higher volatility and increased credit risk when compared to other fixed-income investments. REITs are subject to real estate risks associated with operating and leasing properties. Additional risks include changes in economic conditions, interest rates, property values, and supply and demand, as well as possible environmental liabilities, zoning issues and natural disasters. Stocks can have fluctuating principal and returns based on changing market conditions. The prices of small company stocks generally are more volatile than those of large company stocks. International investing involves special risks not found in domestic investing, including political and social differences and currency fluctuations due to economic decisions. Investing in emerging markets can be riskier than investing in well-established foreign markets. The MSCI EAFE Index is designed to represent the performance of large and mid-cap securities across 21 developed markets, including countries in Europe, Australasia and the Far East, excluding the U.S. and Canada. The Russell 2500 Index measures the performance of the 2,500 smallest companies (19% of total capitalization) in the Russell 3000 index. The S&P 500 index measures the performance of 500 stocks generally considered representative of the overall market. The Wilshire REIT Index is designed to offer a market-based index that is more reflective of real estate held by pension funds. ~ LFN Communications 2nd Quarter Client Market Update Letter CRN-3154734-070820