- Just over one quarter into 2018, today’s investment environment is very different from that of 2017. Last year, U.S. stocks rose nearly 22% and experienced little volatility along the way.1
- Market momentum largely continued into January 2018 as the Dow Jones Industrial Average completed its fastest 1,000 point gain ever – in just eight days.2
- Since then, conditions have changed drastically. In February 2018, the S&P 500 Index recorded its first negative monthly total return in the past 16 months followed by a 2.5% drop in March.3
- As the chart highlights, stocks also have experienced significantly wider swings in 2018 than they did last year. For example, the S&P 500 Index has experienced moves of 1% in 28 of 70 trading days, or 40%, compared to just 8 of 251 days in 2017.
- Looking further into 2018, we believe there are numerous additional sources of volatility, including potential inflationary pressures, global central bank deleveraging, fiscal and trade policy uncertainty and the potential for a more active Federal Reserve.
- With these in mind, investors may be well served in preparing their portfolios for further volatility during the rest of the year.
1 S&P 500 Index.
2 The Wall Street Journal, https://on.wsj.com/2Dm2qFI.
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