The second quarter brought further confirmation that we are facing a very different investment landscape than a year ago. In 2017, the market climbed month after month, with almost no volatility along the way. In contrast, world equity markets took a roller coaster ride in the first half of 2018, yet ended up right about where they began the year. Investor sentiment lately seems to swing between optimism over continued economic and earnings growth on the one hand, and pessimism over a possible trade war and longevity of the current expansion on the other. Over a two-week span in April alone, the US market jumped nearly 5%, but gave it almost all back by the start of May. From that low point, it climbed about 6% into mid-June, only to retreat heading into mid-year.
The sheer volume of important news headlines coming our way daily can seem overwhelming at times. Our counsel is to try to keep an even keel amidst the barrage. Easier said than done, we know, but we are here to help you do just that. (more…)
Note: This post is an excerpt from Gould Asset Management’sEconomic and Market Review for the Second Quarter of 2018. The excerpt is posted here for the benefit of our blog subscribers.
US Stocks Move into Positive Territory for 2018 as Market Volatility Subsides
After a volatile start to 2018, US stocks found their footing in the second quarter, rising 3.4% on the period, as measured by the S&P 500 stock index. Most of the gains occurred in May, and US stocks now have risen 2.7% year-to-date. Markets were buoyed by positive earnings momentum, supportive economic data, and a de-escalation of tensions between the US and North Korea. Markets, however, showed they are vulnerable to escalating trade threats, as the Trump administration moved ahead with tariffs on imports from China and several other countries.
Market volatility was mostly subdued in the second quarter after a rather tumultuous start to the year. The VIX implied volatility index was above 20 at the start of April (near its long-term average), however it began trending downward soon thereafter, hitting a tranquil 11.6 in early June, before rising to about 16 at quarter-end. Concerns about the US quitting the Iran nuclear accord and the potential for a US-China trade war had surprisingly little impact on measures of investor fear. (more…)
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