Wow what a year in the stock market!
We started the year hearing about Coronavirus for the first time. Then the first Coronavirus death occurred in February in Seattle. Then the pandemic took over, causing States to shut down all activities. The market plummeted over 34% in March.
Since then, Covid has ruled the headlines, however the market has recovered solidly from the March lows, once again proving that "staying put" is the best course of action when market volatility spikes.
The U.S. stock market was up an impressive 9.24% for the third quarter, which is somewhat surprising given the market correction that occurred in September.
The correction was due mostly to fears that stock prices have recovered too much too quickly. It was a standard market pullback, and not out of place considering the amazing recovery that has occurred since March. These corrections are the price one pays to invest in stocks. Although the volatility has become more intense the past few years.
The U.S. stock market was up 21.98% in the second quarter of 2020, producing an incredible “v shaped” recovery from the first quarter which was down -20.57%.
This market crash reinforced the lesson of past market crashes: when the market drops suddenly and rapidly the best thing you can do is nothing! Do not even look at your account! The market will recover and so will your account.
The numbers are in for one of the worst quarters in the history of the U.S. stock market. The U.S. market was down -20.57% for the first quarter of 2020.
In unprecedented fashion, the U.S. economy has been shut down to control the coronavirus, creating extraordinary volatility in the U.S. stock market. On several occasions market limits were instituted and circuit breakers set off by the huge drops. There were also a few record-breaking positive days.
The U.S. stock market was up 8.99% in the fourth quarter of 2019 and up 31.22% for the year. 2019 was an incredible year in the market. All investment types performed very well. Market volatility flattened during the fourth quarter as stock prices roared higher. The Federal Reserve’s reduction in interest rates and progress with a phase one deal with China provided the fuel for the strong fourth quarter.
The U.S. stock market was up 1.28% for the third quarter of 2019 and up 20.40% year to date.
Market volatility increased during the past quarter. August, September and October are the most volatile months for the stock market historically. The trend is certainly holding true this year.
The U.S. stock market was up an astonishing 14.09% for the first quarter of 2019. The market recovered from the worst quarterly performance since 2011 with the best quarterly performance in ten years.
I think it is important to reiterate a fact I preach during market drops – that they are terrific buying opportunities. Anyone who contributed to their 401(k) in the fourth quarter of 2018 bought amazingly strong and profitable companies at super discounted prices. Stock prices in December may turn out to be prices that aren’t seen again for many of those stocks.
The U.S. stock market was down an astonishing -14.08% for the fourth quarter of 2018, and down -5.05 for the year. The fourth quarter was the worst quarter for U.S. stocks since 2011 and the first down year since the financial crisis of 2008. The U.S. market was down double digits for the year in late December before gaining nearly 7% during the final trading days.Following a strong first nine months of 2018, the end of the year was disappointing. A myriad of issues overwhelmed investors and overshadowed the health the U.S.
Before discussing the third quarter, I need to address the recent volatility in the market. The market has experienced significant volatility last week reacting to higher interest rates. Interest rates are rising, but they are still at historical lows.
We have experienced very low interest rates for over nine years. The latest volatility in the market started when the 10 year bond rate went over 3%. The long term average is 6%, so we are a long way off from the average. The speed at which rates rise is an issue, but rates are not spiking.
The U.S. stock market got back on track in the second quarter, increasing 3.71% for the quarter, however returns for the major benchmarks varied considerably. The market is up 3.08% year to date.
The market started the quarter off with a fairly significant drop, but performed solidly throughout the quarter, driven by very good corporate earnings which are the still benefiting from the corporate tax cuts and outweighing the negative impact of the news on trade tariffs.