Approaching a Record - April 17, 2019

Let’s review the numbers. On Monday April 15th, the S&P 500 Index1 closed within 0.86% of its September 20th high (St. Louis Federal Reserve data).

  • The index is up 15.9% year-to-date (as of April 15).
  • From its December 24th low, the index is up 23.6%.

Market drivers

  • Growth has slowed but data aren’t pointing to a recession.
  • Favorable headlines suggest a U.S./China trade deal is more likely than not.
  • The Fed isn’t projecting any rate hikes this year and plans to stop shrinking its balance sheet by September – sooner than expected.
  • Early read on Q1 earnings season – firms are topping low expectations (Refinitiv through 4/16/19).

Risks include

  • Geopolitical turbulence.
  • Negotiations with China could breakdown.
  • Inflation could unexpectedly accelerate, forcing the Fed’s hand.

Investor’s corner

Timing the market is exceedingly difficult. The ferocity of last-year’s selloff caught most analysts off guard. Few predicted the strong bounce.

What we know – long-term, disciplined investors understand stocks have a long-term upward bias.

Annual performance can vary widely, but since 1950 the S&P 500 has racked up gains in 74% of the years, with a compounded annual return of 12% (Macrotrends/Yahoo Finance data).