Stocks' Rally Hits Roadblock | Phillips Financial

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Stocks’ Rally Hits Roadblock

The word unprecedented seems to have lost its meaning given the number of times we’ve heard it in recent months. But it’s a good word to help describe the confluence of events that include a global pandemic, an economic slowdown here and abroad, job losses, geopolitical tensions and civil unrest. If your head is spinning, we don’t blame you. What we are experiencing can be unnerving.

The equity markets and the global economy have been shaken, and this week saw the markets’ best sustained rally since the ’30s dissipate in just a few hours, while gross domestic product continues to decline and COVID cases continued to rise in key areas. At one point, the S&P 500 had made up for this year’s losses – only to post its worst daily decline since March on fears of a second wave of coronavirus cases (several states have seen upticks of late), an additional 1.5 million jobless claims and the potential impact on domestic and global economies, explained Raymond James Chief Investment Officer Larry Adam. The uncertainty surrounding the availability of a potential vaccine compounded already low investor sentiment.

“Elevated levels of optimism and great expectations of a strong economic and earnings rebound are being met with a dose of reality,” Adam said. “However, we remain optimistic over the longer term.”

Here is a look at key factors you should know:

  • The Federal Open Market Committee left short-term interest rates unchanged and kept its asset purchase plans in place for the foreseeable future.
  • Volatility has crept back up in recent days. Pullbacks are to be expected, but the equity market should climb higher over the next 12 months or so.

We share this to lend perspective on what’s happening in markets here and abroad. Know that we build financial plans with long-term goals in mind and have weathered volatility before.

Investing involves risk, and investors may incur a profit or a loss. All expressions of opinion reflect the judgment of Raymond James and are subject to change. Economic and market conditions are subject to change. The S&P 500 is an unmanaged index of 500 widely held stocks. An investment cannot be made in this index. Material prepared by Raymond James for use by its advisors.