Volatility in the equity markets continues as we near the midterm elections. We believe the volatility is largely a result of uncertainty regarding the election outcomes. The US economy remains strong and there does not appear to be a recession looming in the near future. Once the elections are over we expect equity markets to trade based more on earnings and less on ancillary noise.
During this current Bull Market we have experienced twelve declines of at least 5%, including five declines considered Corrections with at least a 10% drop. In fact, according to BTN Research, 192 of the stocks in the S&P500 are down at least 10% year-to-date through Friday 10/26/18, while 103 of the stocks in the S&P500 are down at least 20% year-to-date.
Of course, all Bear Markets begin with Corrections, but we simply do not see one coming. Time (and elections) will tell.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.
All indices are unmanaged and may not be invested into directly. The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Submitted by Southwest Investment Advisors on October 31st, 2018