• With two and a half months left in the year, the S&P 500 has already generated the fourth best annual total return of the past 20 years.1 The YTD total return only slightly trails that of 2009, when stocks bounced back from the deeply negative returns the previous year.
  • However, this year’s strong performance has come as investment challenges have multiplied. U.S. and global economic growth, for example, have slowed and are expected to decelerate further in 2020.2 Additionally, year-over-year earnings for S&P 500 companies appear set to decline in Q3 for the third consecutive quarter.3
  • Market-based indicators such as the 10-year U.S. Treasury yield also don’t paint a positive picture of forward growth. The 10-year is above its 3-year low of early September but remains far below its recent peak late last year.
  • Stocks may in fact continue their climb through year-end. But it’s important for investors to keep in mind that their rise this year has also come with significant bouts of volatility that began in 2018.
  • Particularly in today’s environment of significant economic and policy uncertainty, any new data could easily surprise to the downside, causing alarm bells to sound and feeding back into higher volatility.

1 Bloomberg Finance, L.P., as of October 17, 2019.
2 International Monetary Fund, http://bit.ly/2qpNeSo.
3 FactSet, http://bit.ly/35NiB9s.


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