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Chart of the week

Volatility remains elevated in 2019

See how economic uncertainty has amplified market volatility – and what that may mean for investors – in this week’s chart.

March 8, 2019 | 1 minute read
Daily movement of S&P 500 Index
  • U.S. economic growth remains resilient nearly 10 years into the current economic expansion. Yet macro risks have gradually increased throughout the past year, including slowing economic and earnings growth, an uncertain path forward for the Fed and ongoing U.S.–China trade tensions.
  • Much of this year’s stock market rebound – the S&P 500 is up more than 10% YTD – has come as a result of the Fed’s decidedly accommodative turn beginning in late December.1
  • Looking longer term, however, it becomes clear that stock market activity has been reflecting the increasingly uncertain macro environment. U.S. stocks are up a healthy 6.1% in the 14-month period since January 2018.1 However, stocks are down approximately 4% in the five-month period since October 2018.1
  • Following a year of very little market volatility, volatility spiked starting in January 2018 and became exaggerated late in the year as investors focused once again on macro-level risks we see in today’s economy.2 As the chart highlights, daily movements of 1% or more have become more common since January 2018.2
  • Against this backdrop, investors may be well served by preparing their portfolios for an environment of higher volatility to continue for the foreseeable future.

  • S&P 500 Index.

  • Macrobond, FS Investments, as of March 7, 2019.

The chart of the week and any accompanying data is for informational purposes only and shall not be considered an investment recommendation or promotion of FS Investments or any FS Investments fund. The chart of the week is subject to change at any time based on market or other conditions, and FS Investments and FS Investment Solutions, LLC disclaim any responsibility to update such market commentary. The chart of the week should not be relied on as investment advice, and because investment decisions for the FS Investments funds are based on numerous factors, may not be relied on as an indication of the investment intent of any FS Investments fund. None of FS Investments, its funds, FS Investment Solutions, LLC or their respective affiliates can be held responsible for any direct or incidental loss incurred as a result of any reliance on the chart of the week or other opinions expressed therein. Any discussion of past performance should not be used as an indicator of future results.

This information is educational in nature and does not constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment. FS Investments is not adopting, making a recommendation for or endorsing any investment strategy or particular security. All views, opinions and positions expressed herein are that of the author and do not necessarily reflect the views, opinions or positions of FS Investments. All opinions are subject to change without notice, and you should always obtain current information and perform due diligence before participating in any investment. FS Investments does not provide legal or tax advice and the information herein should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact any investment result. FS Investments cannot guarantee that the information herein is accurate, complete, or timely. FS Investments makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information.

Any projections, forecasts and estimates contained herein are based upon certain assumptions that the author considers reasonable. Projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results. The inclusion of projections herein should not be regarded as a representation or guarantee regarding the reliability, accuracy or completeness of the information contained herein, and neither FS Investments nor the author are under any obligation to update or keep current such information.

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