We had our company’s Investment Committee meeting last Friday and are releasing our “Monthly Market Commentary” today. In light of the sell-off in stocks today, we thought we would offer this quick update of what happened along with our perspective.
Today, the S&P 500 stock index fell 2.98% to 2844.74. That index is down 6% from the peak set just last month. The reason cited by the media for the sell-off is the intensifying “trade war” between the U.S. and China. China devalued their currency, the yuan, to a 10 year low today.
Our perspective on this is to, as always, stay calm and watch the data, not the exaggerated news. The job of the media is to sell ads, not make you money. The data is still fine. As you will read in the Commentary, while the rate of growth of the U.S. economy is slowing, it is still growing nicely. There is no sign of trouble yet. Additionally, the U.S. stock market averages more than two 10% corrections per year. We are only at 6% off the peak in this correction and are still well above our key technical levels.
While not fun to experience, we view this as normal volatility in what has been a very good year for equities. When the S&P 500 index is up 20% about halfway through a year like this one, it is normal to get a pullback.
Rest assured that we are watching the data carefully and will keep you posted if and when we believe it is time to make a tactical adjustment.