Markets remain relatively calm in a news-packed September.
There was a lot of news in September, from the announcement of an impeachment inquiry to an attack on Saudi oil facilities. But stock markets were not especially volatile, as the S&P 500 (an index of large-cap stocks) moved by more than +/- 1% on only two days. For the month, stocks rose at home and abroad. At home, the S&P 500 was up by 1.87% for the month and the S&P 600 (small caps) by 3.34%. Internationally, The MSCI EAFE Index (developed-market stocks) closed up 2.87% and the MSCI Emerging Markets Index rose by 1.91%. But as longer-term interest rates rose over September, bond prices fell: the Barclays Bloomberg Aggregate Index was down 0.53%.
Why it happened.
While lots happened in September, it is difficult to attribute overall market moves to any individual event. For example, on September 4th, the Hong Kong Chief Executive said she would withdraw a controversial extradition bill, easing tensions with mainland China; the UK parliament took steps to block a no-deal Brexit; and the New York Fed president said the Fed would continue to support the economy. In reaction, stocks were up. But later in the month, stocks fell on news that Congress was launching an impeachment inquiry. Overall, stock markets took in stride the widely anticipated cut in short-term interest rates and an attack on Saudi oil facilities.
The economic data during September was also mixed. Job creation was slower than it had been recently, and consumer spending weakened. On the other hand, industrial production rose more than expected, unemployment remains near historic lows, and inflation remains muted.
What this means for you.
At Financial Engines we build portfolios that are customized for your particular situation and preferences. This month, your account is likely to have seen modest positive returns. Yet the question remains if you are comfortable with the level of risk you have taken on. As always, we encourage you to log into your account to review your asset allocation and make sure it matches with your long-term goals. Given the conflicting news we are seeing, there may be volatility on the horizon. But as this month’s sidebar points out, market returns can vary dramatically from month to month, and year to year. If you have established an asset allocation designed to meet your long-term goals, your best course may be to simply stay invested.