11/24/24
Weekly Market Recap
Last week was another win for U.S. stocks, with the three major indexes (S&P 500, Dow Jones, Nasdaq) all ending in the positive, within a range of +1.50% to +2.00%. Bitcoin had an excellent week as well, nearly crossing the $100,000 mark for the first time ever. Bonds, international stocks, and gold also ended the week on a positive note. While next week will be a shortened trading week due to Thanksgiving (time to get your turkey out of the freezer), there will be a large amount of economic data released on Wednesday. This includes durable goods orders, the PCE index (the Federal Reserve’s preferred measure of inflation), personal spending, and much more. The story we've been hearing for the past two years is that the economy is going to weaken, yet we still haven’t seen a meaningful slowdown. Perhaps the Federal Reserve has managed to pull off the smooth landing everyone has been talking about. However, we must be cautious about becoming too complacent. Market volatility tends to appear when investors least expect it.
Chart of the Week
This is another one of my favorite charts, from JPMorgan Asset Management. The black bars represent the total return for the S&P 500 for each year from 1980 to the present day. The first thing that stands out is that stocks have been positive in 33 of the past 44 years—pretty good odds for stock investors. However, the red dots show the peak-to-trough drop in each year. Notice that even in positive years, stocks dropped throughout the year, sometimes by double digits. The message here is clear: stocks are volatile on a daily, monthly, and even yearly basis. However, as you extend your time horizon, the chances of a positive return increase significantly.
Written by:
Ben Rones, CFA®
Senior Analyst at R&R Financial
Source:FactSet, Standard & Poor’s, J.P. Morgan Asset Management.
Returnsare based on price index only and do not include dividends. Intra-year dropsrefers to the largest market drops from a peak to a trough during the year. Forillustrative purposes only. Returns shown are calendar year returns from 1980to 2023, over which time period the average annual return was 10.3%.
Guide to the Markets – U.S. Data are as of November 21, 2024.
