Weekly Investment Update

US equity markets, as measured by the S&P 500 index, continued to move higher last week, gaining approximately 1%.  The index has now gained more than 50% from the 2020 closing low of 2,237 set on March 23.  The index closed at an all-time high of 3,386 on February 19 shortly before the COVID-19 pandemic began impacting the United States.  For the year, the S&P 500 has now produced a total return for investors of nearly 6%, despite having declined 34% in late February through mid-March[1].  The chart below highlights that despite intra-year average price declines of 13.8%, the annual price return for the S&P 500 has been positive in 30 of the last 40 calendar years.  While the market decline experienced in 2020 was certainly extreme by historical standards, significant market pullbacks are common, and navigating these periods of volatility are a necessary skill of successful long-term investors.

Source: JPMorgan

This week, investors will receive data on the housing market in the form of the NAHB Home Builder Sentiment Index (Monday) and Housing Starts / Building Permits (Tuesday).  The Conference Board will release their composite of Leading Economic Indicators (LEI’s) on Thursday.  While activity has continued to improve from the lows of March and April, there still exists significant unemployment and the potential for future economic pain as these households struggle to make ends meet.  An additional round of fiscal stimulus may be needed to create a bridge until the pandemic is under control in the US, but individuals and investors may have to wait several more weeks as Congress has adjourned for their August recess and are not scheduled to officially return until mid-September.

 

Key Economic Releases This Week

Source: MarketWatch

Asset Class Returns

Source: Morningstar
As of August 14, 2020

Prices & Interest Rates

Source: Bloomberg, FactSet
As of August 14, 2020

[1] Source: Morningstar

Past performance may not be representative of future results.  All investments are subject to loss.  Forecasts regarding the market or economy are subject to a wide range of possible outcomes.  The views presented in this market update may prove to be inaccurate for a variety of factors.  These views are as of the date listed above and are subject to change based on changes in fundamental economic or market-related data.  Please contact your Financial Advisor in order to complete an updated risk assessment to ensure that your investment allocation is appropriate.