Weekly Market Commentary: August 31, 2015

Provided by geralt/Pixabay
Provided by geralt/Pixabay

U.S. stock markets finished last week higher than they started it, but the five-day ride was awfully bumpy.

Concerns about China’s slowing growth, shifting currency valuations, and falling stock markets, coupled with uncertainty about the Federal Reserve’s next monetary policy move, contributed to malaise in world markets early last week.

After falling by about 6 percent the previous week, U.S. stocks spiraled even lower early last week. They flirted with correction status (a correction is a 10 percent drop from previous highs) before moving higher.

By midweek, markets were on the rebound, bolstered in part by the comments of New York Fed President William Dudley who indicated a September rate hike might not be all that compelling. Strong U.S. economic data also soothed some investors. Barron’s reported:

“The economic data, however, have been good enough to suggest that the market is too pessimistic. There was that strong second-quarter gross-domestic-product reading, which even included signs of stronger capital spending, while good housing data suggest that third-quarter GDP could be better than many observers expect.”

Market whiplash left investors feeling pretty shaky, as did late-week comments from Fed Vice Chairman Stanley Fischer who indicated it was too soon to know what the Fed would decide about interest rates in its September meeting. He indicated the decision would depend on economic data that is still being collected.

While the market’s end of week bounce was welcome, The Wall Street Journal reported traders and investors appear to be ready for additional volatility.

Whether markets are volatile or calm this week, it’s important to remember that it’s impossible for any of us to control what happens in Washington, on Wall Street, or on Main Street. We can, however, control how we prepare for and respond to market volatility. As you know, we believe thoughtful goal identification, risk tolerance education, and a disciplined approach can help investors reach their long-term financial goals.

We understand that market volatility is uncomfortable, but it is not unusual or unexpected. If you have any questions or would like to discuss recent events, please contact your financial advisor.

Data as of 8/28/15 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 0.9% -3.4% -0.4% 12.2% 13.7% 5.1%
Dow Jones Global ex-U.S. 0.0 -4.9 -13.2 3.3 2.5 1.9
10-year Treasury Note (Yield Only) 2.2 NA 2.3 1.6 2.6 4.2
Gold (per ounce) -1.9 -5.4 -12.2 -12.0 -1.9 10.2
Bloomberg Commodity Index 1.8 -14.4 -29.3 -14.8 -7.5 -6.2
DJ Equity All REIT Total Return Index -2.9 -4.7 2.1 8.5 12.8 7.0

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

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