If you’ve felt like stock prices were a little more volatile in 2022 than in recent years, your “spidey senses” are right on the money.
The S&P 500 has posted 81 daily moves of at least 1% through August. Of those moves, 39 have been to the upside and 42 to the downside.
In the chart below, I highlighted 2022 to show how it compares to other years since 2000. Since the daily report was compiled, stocks have seen a few more 1% swings. With more than 70 trading days left in the year, my hunch is we could see more.
What’s fueling the volatility? The Fed, largely. Its monetary policy of raising interest rates to slow inflation without triggering a recession has created a lot of uncertainty.
Price swings are unnerving, but as the chart shows, they are nothing new. What’s most important is focusing on your goals and not paying too much attention to Wall Street's daily ups and downs.
Since no one can time the market, we stay invested to participate in all the returns our strategy will provide. This includes the compounding of investment income at lower prices- a silver lining.
We accept the lows to get the corresponding highs, and see the average work out over time.
If you would like to review your strategy, please feel free to give me a call!
The S&P 500 Composite Index is an unmanaged index that is considered representative of the overall U.S. stock market. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index. The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost.
1% Moves in S&P 500
September 23, 2022