Headlines of Market Highs
The U.S. stock market, measured by the S&P 500 Index advanced this week to set a new record high in price. The technology-heavy NASDAQ Index also advanced, establishing new record highs. It can be challenging to pinpoint a single reason for market advances, especially in the short term. Recent potential catalysts include coronavirus vaccine optimism, personal consumption data that was better than expected, and increased consumer sentiment. Consumption makes up about 70% of our economy; increasing consumption has a positive economic impact.
Headlines of new market highs can lead to mixed feelings. For some, it might feel like new highs may lead to a market decline in the near term. Others may worry they didn’t participate enough. Putting emotions aside, historical data shows that one-year-returns following new markets highs have averaged +13.9% which is higher than the long term average of +10.2% (source: S&P 500 Index, Dimensional Fund Advisors).
Financial markets will always move without regard to any individual’s circumstances. When it comes to planning for and living your financial life (wealth management), it’s not a race against a particular market index. It’s about making thoughtful decisions for the future based on the information available today.
Market Comments - 8/28/2020
The Dow Jones Industrial Average Index, comprised of 30 stocks and weighted based on a stock’s price, is getting reconstituted in part due to Apple’s planned stock split
UnitedHealth Group Inc. will soon be the largest stock weighing in the index, which is currently Apple
Healthcare giant Abbott Labs was up 8% this week after announcing a new fast and low-cost COVID-19 test; related, Abbott also announced a $750 million deal with the U.S. government to provide the new test kits
Initial jobless claims were lower than expected however still above 1 million applicants for a second weak, showing signs of continued weakness in the labor market
10-year U.S. Treasury Bond interest rates have increased to 0.73% after hitting a near-record low of 0.51% early August