Weekly Investment Update

Most stock and bond indexes trended higher last week, as investors seemingly shrugged off concerns over both inflation and the Delta variant and viewed Monday’s pull back as an opportunity to buy the dip. The positive week continues a trend that’s been in place for the entirety of 2021 – the S&P 500 index (a proxy for large-cap US stocks) has yet to experience a 5% correction. In fact, you must go back to early November of last year to find the last time that has occurred. At that time volatility spiked upward and the S&P 500 retreated more than 8% from its prior high (see arrows below).

A line graph depicting CBOE S&P 500 Volatility Index Level from September 2020 to July 2021 and a line graph depicting S&P 500 Total Return Level % Off High from September 2020 to July 2021

For context, the average intra-year decline for the S&P 500 index since 1980 is more than 14%[1]. While this relatively calm climb upward in equity markets this year has been wonderful for investors, it is important to remember that this run has been somewhat atypical. As a result, we encourage investors to revisit their financial plans and, if needed, reduce equity exposure to target levels if they find themselves overweight stocks.

Prices & Interest Rates

Representative Index Current Year-End 2020
Crude Oil (US WTI) $72.17 $48.52
Gold $1,802 $1,893
US Dollar 92.91 89.94
2 Year Treasury 0.22% 0.13%
10 Year Treasury 1.30% 0.93%
30 Year Treasury 1.92% 1.65%
Source: Morningstar, YCharts, and US Treasury as of July 25, 2021

Asset Class Returns

Category Representative Index YTD 2021 Full Year 2020
Global Equity MSCI All-Country World 13.5% 16.3%
US Large Cap Equity  S&P 500  18.4% 18.4%
US Large Cap Equity  Dow Jones Industrial Average 15.7% 9.7%
US Small Cap Equity  Russell 2000 12.4% 20.0%
Foreign Developed Equity MSCI EAFE 9.0% 7.8%
Emerging Market Equity MSCI Emerging Markets 2.8% 18.3%
US Fixed Income Bloomberg Barclays Municipal Bond 1.9% 5.2%
US Fixed Income Bloomberg Barclays US Agg Bond -0.8% 7.5%
Global Fixed Income Bloomberg Barclays Global Agg. Bond -2.5% 9.2%
Source: YCharts as of July 25, 2021

[1] JP Morgan Guide to the Market, July 22, 2021

Past performance may not be representative of future results.  All investments are subject to loss.  Forecasts regarding the market or economy are subject to a wide range of possible outcomes.  The views presented in this market update may prove to be inaccurate for a variety of factors.  These views are as of the date listed above and are subject to change based on changes in fundamental economic or market-related data.  Please contact your Financial Advisor in order to complete an updated risk assessment to ensure that your investment allocation is appropriate.   

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