Market Update – February 5, 2018

  • February 6, 2018

Investment Outlook – Market Update

by Marshall Bartlett,

It appears that volatility has returned to the markets, at least for the moment. The S&P 500 and Dow Jones fell for a second day, with the S&P falling 4.1% (113 points) and the Dow falling 4.6% (1175 points) respectively on the day, extending the selloff from Friday. Higher interest rates, driven by fears of inflation, leading to faster interest rate increases by the Federal Reserve, has created nervousness for many investors and put indexes back to mid-December 2017 levels.

However, it is important to keep this market volatility in context. While painful, the markets did have a very strong 2017 and it has been since early 2016 since we have seen comparable losses. Additionally, unlike the 2000 and 2008 downturns, there does not appear to be a structural problem we are dealing with. If fact, the economy appears stable at present and tax cuts should help corporations in the months ahead. Hopefully increased consumer spending can help economic growth improve in coming quarters.

In all, we believe such a pullback can be healthy and highlights the importance of an appropriately allocated, diversified portfolio.

Download a PDF version here.