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With half of the year already in the rear-view mirror, we are taking stock of where we have been and looking forward to the second half. Reviewing some of the headlines so far this year, it sometimes seems that they come straight from a sci-fi story. Artificial intelligence has gone mainstream, we have had novel forms of drone warfare, orcas are purposefully sinking ships, the world watched a tourist submarine tragedy unfold, and now two billionaires are taunting each other towards a “cage match” fight. Even after having recently experienced a toilet paper shortage due to a pandemic, these headlines are wild.
Financial markets have been stormy the last week or so as a result of a banking crisis, and you may have seen some dramatic headlines. Several banks in the US had “runs on the bank,” which means too many depositors tried to withdraw funds and the banks were not able to meet redemptions. This is obviously not good, and could likely end with bankruptcy for those banks. However, this situation is not unprecedented, and the government stepped in to alleviate panic and allow the customers of those banks to access their money. Basically, the safeguards and protections in place worked as designed, and in some ways, the government did even more than it needed to in order to maintain order and stability. Just yesterday another bank that seemed to be in trouble was rescued by an infusion from its peers, organized in part by the Federal government.
Happy holidays! The year has really flown by, I personally can’t believe it is already December. We hope you enjoyed your Thanksgiving holiday, and wish you very warm wishes for the rest of the holiday season.
The American poet Robert Frost said “In three words I can sum up everything I’ve learned about life. It goes on.” Those wise words have come to my mind many times over the years, but as I have been thinking of the quote lately it seems to sum up the challenges in the financial markets this year: they go on!
It has been a while since we have sent out a communication on market conditions and the economy outside of our quarterly newsletters. With all of the noise in the markets today, both on the stock and bond side, we figured this was a timely communication. Headlines are filled with news of the Ukraine-Russia war, inflation, interest rates, stock market fluctuations, and yes, even the bond market is making the news these days.
Market Updates
November was a strong month for equities, as investors poured into U.S. stocks following Donald Trump’s election victory early in the month. The S&P 500 gained 5.87 percent in November while the Dow Jones Industrial Average was up 7.74 percent. The Nasdaq Composite finished the month up 6.29 percent after a late-month rally for technology companies. All three indices set record highs during the month, highlighting rising investor optimism for faster growth ahead.
It was a disappointing month for stocks in October as a late-month sell-off caused all three major U.S. indices to end the month in the red. The S&P 500 lost 0.91 percent in October while the Nasdaq Composite dropped 0.49 percent. The Dow Jones Industrial Average lagged its peers and dropped 1.26 percent to start the fourth quarter. Concerns about future growth prospects for large technology companies served as a headwind for stocks during the month.
August was an encouraging month for stocks, as markets ended the month in positive territory despite a brief sell-off at the start of the month. The S&P 500 gained 2.43 percent while the Dow Jones Industrial Average managed a 2.03 percent return. The technology-heavy Nasdaq Composite index lagged its peers but ended the month up 0.74 percent.
