The market rally was put on pause last week as major indexes in the U.S. retreated from recent highs. The S&P 500 Index fell to a level of 3,703, representing a loss of 0.45%, while the Russell Midcap Index moved 0.31% higher last week. Meanwhile, the Russell 2000 Index, a measure of the Nation’s smallest publicly traded firms, continued it’s impressive run this quarter advancing 1.33% over the week. International equities were lower on the week as developed and emerging markets returned -1.08% and -1.51%, respectively. Finally, the yield on the 10-year U.S. Treasury was unchanged, finishing the week at 0.94%.
We’ve nearly made it to the end of 2020, and what a year it has been. While we initially pegged 2020 as a year where investors would hone in on company earnings, the economy, and news related to the elections to help determine market direction, that was swiftly upended by the COVID-19 pandemic. While we could write a novel recapping all the action in 2020, we’ll assume you’re up to speed as an avid reader of our weekly updates. Instead, below is a summary of notable market milestones and returns for the S&P 500 Index and the well-known Volatility index (VIX) to demonstrate the rollercoaster ride of 2020.
In addition, Congress passed an additional $900 billion stimulus package prior to year-end. The highly anticipated and highly debated package addressed many major issues from both sides of the aisle. While some believe that more stimulus is needed, it is at least encouraging that lawmakers were able to come to an agreement as the economic hardships citizens and businesses face due to COVID-19 are still very prominent.
As we understand it, some of the notable items in the final COVID-19 relief bill of 2020 include, but are not limited to, the following:
• $166 billion in direct checks to households
• $120 billion in unemployment aid
• $325 billion for small business relief, which includes $284 billion in loans through the Paycheck Protection Program
• $25 billion in rental assistance for individuals who lost their sources of income during the pandemic
• $82 billion for school funding
• $45 billion for transportation industry assistance
• $48 billion for vaccine-related expenses
• $15 billion grant program for theaters and other live venues
As always, we continue to encourage investors to stay disciplined and work with experienced financial professionals to help manage their portfolios through various market cycles within an appropriately diversified framework that is consistent with their objectives, time-frame, and risk tolerance.
From our family to yours, best wishes for a happy and healthy 2021 to all!
Sources for data in tables: Equity Market and Fixed Income returns are from JP Morgan as of 12/23/20. Rates and Economic Calendar Data from Bloomberg as of 12/23/20. International developed markets measured by the MSCI EAFE Index, emerging markets measured by the MSCI EM Index, U.S. Large Cap defined by the S&P 500. Sector performance is measured using the GICS methodology.
Disclosures: Past performance does not guarantee future results. We have taken this information from sources that we believe to be reliable and accurate. Hennion and Walsh cannot guarantee the accuracy of said information and cannot be held liable. You cannot invest directly in an index. Diversification can help mitigate the risk and volatility in your portfolio but does not ensure a profit or guarantee against a loss.
Diversification can help mitigate the risk and volatility in your portfolio but does not ensure a profit or guarantee against loss.
Investing in commodities is not suitable for all investors. Exposure to the commodities markets may subject an investment to greater share price volatility than an investment in traditional equity or debt securities. Investments in commodities may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity.
Products that invest in commodities may employ more complex strategies which may expose investors to additional risks.
Investing in fixed income securities involves certain risks such as market risk if sold prior to maturity and credit risk especially if investing in high yield bonds, which have lower ratings and are subject to greater volatility. All fixed income investments may be worth less than the original cost upon redemption or maturity. Bond Prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can result in the decline of the value of your investment.
MSCI- EAFE: The Morgan Stanley Capital International Europe, Australasia and Far East Index, a free float-adjusted market capitalization index that is designed to measure developed-market equity performance, excluding the United States and Canada.
MSCI-Emerging Markets: The Morgan Stanley Capital International Emerging Market Index, is a free float-adjusted market capitalization index that is designed to measure the performance of global emerging markets of about 25 emerging economies.
Russell 3000: The Russell 3000 measures the performance of the 3000 largest US companies based on total market capitalization and represents about 98% of the investible US Equity market.
ML BOFA US Corp Mstr [Merill Lynch US Corporate Master]: The Merrill Lynch Corporate Master Market Index is a statistical composite tracking the performance of the entire US corporate bond market over time.
ML Muni Master [Merill Lynch US Corporate Master]: The Merrill Lynch Municipal Bond Master Index is a broad measure of the municipal fixed income market.
Investors cannot directly purchase any index.
LIBOR, London Interbank Offered Rate, is the rate of interest at which banks offer to lend money to one another in the wholesale money markets in London.
The Dow Jones Industrial Average is an unweighted index of 30 “blue-chip” industrial U.S. stocks.
The S&P Midcap 400 Index is a capitalization-weighted index measuring the performance of the mid-range sector of the U.S. stock market and represents approximately 7% of the total market value of U.S. equities. Companies in the Index fall between S&P 500 Index and the S&P SmallCap 600 Index in size: between $1-4 billion.
DJ Equity REIT Index represents all publicly traded real estate investment trusts in the Dow Jones U.S. stock universe classified as Equity REITs according to the S&P Dow Jones Indices REIT Industry Classification Hierarchy. These companies are REITs that primarily own and operate income-producing real estate.