Quarterly Commentary – April 2018

Volatility is back in the financial markets and we believe that is a good thing. Stock markets are driven by buyers and sellers. If all agree, the markets will move in the same direction. Up if all agree to buy and down if all agree to sell. It really is that simple. However, that is not reality. Rarely do we all agree on any particular subject and certainly not on finances. This is why the year 2017 was so unusual. When looking at the major stock market indexes, Standard & Poors 500, Dow Jones Industrial Average and NASDAQ there was only 1 month in 2017 when these indexes fell. Dow Jones Industrial and S&P 500 were down in the month of March 2017 and the only negative month for the NASDAQ was June. How unusual was that? Listed below is the number of down months in each of the past ten years for the major indexes.

YEARDOWS&P 500NASDAQ
2017111
2016455
2015666
2014446
2013222
2012333
2011578
2010555
2009233

From this table, you can see how unusual the stock markets were last year. So far in 2018, the “normal” volatility has returned with 2 of the first 3 months being negative. Does this portend future gloom and doom for the financial markets? Possibly, but if you look at the above numbers the probability of that is low. What is much more likely and in line with our current fractured political system is a much greater degree of volatility than we saw last year but overall the probability of better market conditions as the impact of lower corporate taxes and continued job growth has its full impact on our economy. Quarter to quarter we will definitely see variation but the theme of continued global growth in our opinion will remain on track.

Looking at the actual numbers for the first quarter of 2018, the Standard & Poors 500 was down -0.76%. Despite the volatility experienced in the first 3 months, the Index was essentially flat. However, for the year April 1, 2017 – March 31, 2018 the market, as measured by the S&P 500 is up 13.99%.

Past performance does not indicate future results. This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties.  Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed by Kestra Advisory Services, LLC. as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The S&P 500 is comprised of 500 stocks representing major U.S. industrial sectors and is considered representative of the market as a whole. Performance figures are inclusive of dividends reinvested. Investors cannot invest directly in an index. Standard & Poor’s Index data can be found at http://www.standardandpoors.com/home/en/us.  The Dow Jones Industrial Average is a popular indicator of the stock market based on the average closing prices of 30 active U.S. stocks representative of the overall economy. The Nasdaq Stock Market is an American stock exchange. It is the second-largest exchange in the world by market capitalization, behind only the New York Stock Exchange located in the same city.