By Tom Burnett CFA
Stock market investors know they have been on a rollercoaster ride this year. After making record high levels in February, the Covid-19 virus outbreak and countermeasures led to a sharp sell off in March, leaving the major Indexes down for the year. As the nation’s mood changed to optimism about a quick economic recovery, the markets rallied sharply and have now recaptured most of the losses incurred in March. As we near the halfway point of the year, we will dig deeper into the varying returns provided by the separate asset classes.
Among securities, the long-term Treasury bond is the winner so far this year with a return of 18.6%, including coupon payments. Stock market returns are varied by index. The NASDAQ Composite with its extensive technology membership (MSFT, AAPL, AMZN, FB, GOOG) is up 10.3%. The more traditional indexes, however, are down for the year. The S/P 500 Index is down 3.3% and the Dow Jones Industrial Average is down 7 The troubled airline industry has pushed the Dow Transportation Index down 15.1%. Small stocks have underperformed their larger colleagues as the S/P Small Cap 600 is down 16.7%. Growth stocks continue to outperform value styles. The Vanguard Growth ETF is up 10.2% this year, compared to a return of negative 3.0% for the Vanguard Value ETF (data from Morningstar).
Commodities also have a varied return profile this year. Gold is up 13.8% while crude oil is down 37.1%. The sharp fall in crude oil prices is the main reason for the 32.5% decline in the S/P Energy Index this year. Clearly, investors face many choices and styles as the markets gyrate with volatile direction changes and sharp, sudden movements.
(Return Data from June 17 “Wall Street Journal”)
Tom Burnett CFA is Director of Research