The last week has been a roller coaster for investors. After a huge selloff on Monday and Tuesday, the Dow turned on a dime and posted its best two day point gain in its more than 100 year history. The broader market S&P 500 was down 8.1% YTD as of Tuesday but gained 6.3% in the following two days, erasing much of the damage. That is why it is unfortunate to read that between 8/19 and 8/26 investors pulled an all-time record high out of global equity funds (according to EPFR Global data). Tuesday’s outflow alone was $19 billion, the second largest one day outflow since 2007. Investors without a plan panicked and tried to avoid further carnage but instead missed out on a spectacular rebound. The market volatility is not over. The U.S. economy is doing fine but global growth is fragile, oil company earnings are struggling and a Fed rate hike is looming. So if you don’t have a plan this would be the time to make one. Please re-read the Voya Global Perspectives™ special report, “Stick to Your Plan During the Market Correction”.
The Latest Market Commentary From Our Strategists
Weekly Commentary & Statistics
Stock markets around the globe slid early in the week and then plummeted on Thursday and Friday. The Dow entered correction territory, posting its worst two-day drop since the 2008 financial crisis. Explanations for the selloff included the impact of slowing global growth on corporate earnings, aftershocks from China’s currency devaluations and emerging market vulnerability to U.S. rate hikes. The only gainers for the week were gold and government bonds. The yield on the ten-year U.S. Treasury fell to 2.05%, reversing its August climb.
Monthly Commentary & Outlook
- Developed markets have demonstrated awe-inspiring resilience in the face of emerging market struggles.
- Emerging market currencies are plunging. U.S. monetary policy is partly to blame but the true culprit is China.
- U.S. interest rate hikes are likely to be gradual. Investors who exit bonds may miss income opportunities.
- Energy sector problems cloud the Q2 earnings season. It could be the first quarter of negative growth since Q3 2012.
- Despite China’s recent selloff, keep in mind that volatility may be rewarded.