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.