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The Difference the Right Financial Advisor Makes
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Recent Market Volatility
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Understanding Volatility
After months of relative calm, market fluctuations are causing many investors to wonder what is happening to the economy. Last week, the S&P 500 lost 5.16%, the Dow dropped 5.21%, and the NASDAQ declined 5.06%. The MSCI EAFE also gave back 6.19%. These losses pushed all four indexes into negative territory for the year.[1] In addition, the weekly performance included significant volatility, as stocks had large fluctuations both within days and from one day to the next. The Dow, for example, lost over 1,000 points twice during the week—and also twice gained over 300 points.[2]
During times like these, viewing events in their proper context is imperative. This week, we are going beyond our typical market update in an effort to provide you with clarity and perspective.
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Markets Slide as Bond Yields Rise
After 4 straight weeks of gains, the markets have slipped. As of Friday, the S&P 500 lost 3.85%, the Dow dropped 4.12%, and the NASDAQ decreased by 3.53%.[i] International stocks in the MSCI EAFE also took a 2.78% hit.[ii] Domestically, the losses spanned sectors and asset classes. For the S&P 500, all 11 of the index’s industries lost ground last week. This decline came after the S&P 500 had its best January performance in over 20 years.[iii]
So, what happened?
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Stocks Jump Again
Stocks had an impressive week yet again, as each of the domestic indexes reached record highs and gained at least 2%.[1] The S&P 500 added 2.23%, the Dow increased 2.09%, and the NASDAQ grew 2.31%.[2] International stocks in the MSCI EAFE joined the growth, adding 1.49%.[3]
On Monday, January 22, the government shutdown ended after 3 days, as House and Senate members reached an initial compromise. President Trump signed the measure on Monday evening, securing government funding until February 8.[4]