This chart is daunting at first, but stay with me! I think it really puts the performance of the stock market over the past few months in perspective. It features the total return performance figures for the S&P 500 Index and its 11 major sectors over four specific periods this year.
- The first column of total returns in the table above indicates that, with the exception of Materials and Energy, the S&P 500 Index and the sectors that comprise it were off to a prosperous start to 2020.
- Due largely to the onset of coronavirus (COVID-19), a major shift in sentiment occurred after the close of trading on 2/19/20. The second column of total returns captures the depth of the sell-off in the stock market.
- The S&P 500 Index actually crossed over into bear market territory (a 20% or more price decline from the most recent high) at the close of trading on 3/12/20. It only took 16 trading days, the fastest path to a bear market ever. The sell-off did not cease until 3/23/20.
- What changed around 3/23/20? The Federal Reserve, Treasury Department and Congress joined up with the Trump administration to pull together trillions of dollars of aid and stimulus to help prop up workers, companies and municipalities in this time of need.
- They have acknowledged that they may need to contribute additional stimulus until the economy can mount a recovery on its own.
- The third column of total returns shows the rebound currently in progress. Despite the severe economic fallout anticipated from shutting down huge chunks of the U.S. economy for an indeterminate period, it appears that investors have placed their confidence in the government’s ability to mitigate this pandemic, in our opinion.
- The last column reflects the year-to-date total returns through 4/29/20. While we can’t be sure that the stock market won’t encounter more sell-offs in the weeks and months ahead, we believe there is still value to be had for those investors with a long time horizon.