Most stock and bond indexes trended higher last week, as investors seemingly shrugged off concerns over both inflation and the Delta variant and viewed Monday’s pull back as an opportunity to buy the dip. The positive week continues a trend that’s been in place for the entirety of 2021 – the S&P 500 index (a proxy for large-cap US stocks) has yet to experience a 5% correction. In fact, you must go back to early November of last year to find the last time that has occurred. At that time volatility spiked upward and the S&P 500 retreated more than 8% from its prior high (see arrows below).
For context, the average intra-year decline for the S&P 500 index since 1980 is more than 14%[1]. While this relatively calm climb upward in equity markets this year has been wonderful for investors, it is important to remember that this run has been somewhat atypical. As a result, we encourage investors to revisit their financial plans and, if needed, reduce equity exposure to target levels if they find themselves overweight stocks.
Prices & Interest Rates
| Representative Index | Current | Year-End 2020 |
|---|---|---|
| Crude Oil (US WTI) | $72.17 | $48.52 |
| Gold | $1,802 | $1,893 |
| US Dollar | 92.91 | 89.94 |
| 2 Year Treasury | 0.22% | 0.13% |
| 10 Year Treasury | 1.30% | 0.93% |
| 30 Year Treasury | 1.92% | 1.65% |
| Source: Morningstar, YCharts, and US Treasury as of July 25, 2021 |
Asset Class Returns
| Category | Representative Index | YTD 2021 | Full Year 2020 |
|---|---|---|---|
| Global Equity | MSCI All-Country World | 13.5% | 16.3% |
| US Large Cap Equity | S&P 500 | 18.4% | 18.4% |
| US Large Cap Equity | Dow Jones Industrial Average | 15.7% | 9.7% |
| US Small Cap Equity | Russell 2000 | 12.4% | 20.0% |
| Foreign Developed Equity | MSCI EAFE | 9.0% | 7.8% |
| Emerging Market Equity | MSCI Emerging Markets | 2.8% | 18.3% |
| US Fixed Income | Bloomberg Barclays Municipal Bond | 1.9% | 5.2% |
| US Fixed Income | Bloomberg Barclays US Agg Bond | -0.8% | 7.5% |
| Global Fixed Income | Bloomberg Barclays Global Agg. Bond | -2.5% | 9.2% |
| Source: YCharts as of July 25, 2021 |
[1] JP Morgan Guide to the Market, July 22, 2021
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