Every Year Looks Volatile Compared To 2017

Bob Carey
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Every Year Looks Volatile Compared To 2017

Posted Under: Broader Stock Market

View from the Observation Deck

In 2017, the S&P 500 Index (the "index") did not register a single down month on a total return basis, which includes reinvested dividends. That is not typically the case.
In nine of the past 10 calendar years, which includes the 2008-2009 financial crisis, the index endured no less than two negative total return months and as many as eight (see table).
In the first three months of 2018, the index posted the following total returns: 5.73% (January); -3.69% (February); and -2.54% (March), according to Bloomberg.
It's total return stood at 0.05% in April as of the 25th. The Stock Trader's Almanac states that April has historically been the third-best month for the S&P 500 Index, according to MarketWatch. The index posted gains in April in nine of the past 10 calendar years, according to S&P Dow Jones Indices.
While volatility has returned to the stock market, it is actually below average on an historical basis. It just seems high when compared to 2017.
Brian Wesbury, Chief Economist at First Trust Advisors L.P., has a 2018 year-end price target of 3,100 on the S&P 500 Index. As of the close on 4/25/18, the index stood at 2,639.40. If Wesbury's forecast proves accurate, the index would need to rise by 17.45% to reach 3,100. That level of return looks similar to the gains posted in 2010 and 2012 (see table), which endured some steep monthly declines (see table).

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. There can be no assurance that any past trends will continue or that projections cited will occur. The S&P 500 Index is a capitalization-weighted index comprised of 500 stocks (currently has 505) used to measure large-cap U.S. stock market performance.

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Posted on Thursday, April 26, 2018 @ 2:13 PM • Post Link

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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.

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