Market Volatility Update
Over the past few months, we’ve seen volatility return to the markets.
At the beginning of February, stocks were in the midst of a dramatic correction. Investor sentiment had swung to extreme levels of fear and a bearish outlook for stocks was the prevailing attitude.
Then with little or no warning, the stock market selloff stopped, investor sentiment turned bullish, and stocks quickly rebounded… this is often the case when fear is driving a market selloff.
These gains have been furthered by a boat load of better than expected economic data. Just last week there was better than expected data on housing prices, new home sales, durable goods, Chicago PMI, University of Michigan Confidence, and a pickup in bank lending. Needless to say, this is the type of thing that drives stocks higher.
In fact, the S&P 500 has recouped all of its losses and even finished the month by reaching a new 52-week high of 1,862.
Now the bullish, ‘risk-on’ outlook is in jeopardy due to the threat of war between Russia and Ukraine. And for good reason… anytime there is a threat of war, it makes investing in stock riskier.
Investors’ natural aversion to risk will force some people and institutions out of the market. It’s why we had a reversal of fortunes for the stocks, sectors, and ETFs on Friday after the war risk emerged. Not surprisingly, the best performing sectors over the last month were hit the hardest in the selloff.
Here’s the thing…
The latest data is clearly pointing to an end to the soft economic patch we saw over the last few months. So there’s a solid foundation for stocks to build on.
Don’t let the volatility caused by the dispute between Ukraine and Russian send you running for cover. The uncertainty it’s causing will pass.
And if the economy stays on its current trajectory, we should see the S&P 500 and many ETFs surge to new highs in short order.
Good Investing,
Corey Williams
Category: ETFs, Market Analysis
