It seems hard to believe that we have already passed the halfway mark for 2017. June’s positive 0.6% total return brings the year-to-date performance for the S&P 500 to 9.3% as of June 30th. So far, the S&P 500 has achieved 24 new closing highs since the beginning of the year. Compared to the volatility investors endured in previous years, the past six months has been an exceptionally smooth ride with only mild pullbacks. This is especially notable considering the flow of headlines that have come out of Washington.
This Sunday, the bull market that began on March 9, 2009 will reach its 100th month and will have clocked 3,044 calendar days. At 8.3 years old on July 9th, it will still rank as only the second longest in history. To take the top spot for length of time, the current bull market will need to go another 1,451 calendar days or nearly 4 more years.
Given the age of the bull market it is reasonable that stock valuations in general are no longer cheap. Yet equity prices still have room to move higher if we see continued earnings growth supported by a growing economy. A pullback or at least an increase in volatility would not be surprising, however, if you also consider this year’s persistent climb without a correction of even 5%. I would caution against market timing though because length of time does not determine when corrections occur nor does valuation. Without a triggering event, which is impossible to predict, economic data and statistics are currently on the side of stocks.
Historically, July has averaged a positive return for the S&P 500. In addition, years that start out positive the first half of the year more often also deliver a positive second half performance as well. Favorable statistics aside, the steady gains showing up in the monthly jobs numbers, low cost of energy, modest gasoline prices, low inflation, and historically low interest rates are contributing to high readings in consumer confidence. Momentum remains in place from strong reports showing better than expected growth in both the manufacturing and services side of our economy. These factors increase the probability of seeing positive returns from equities continue as we enter the second half of the year.
We hope you will visit our website at www.buckinghamfinancial.com where you will find our BFG Newsletter which covers a broad spectrum of financial planning topics.
Linda S. Parenti, CFA
President & Chief Investment Strategist
RISKS AND IMPORTANT CONSIDERATIONS
Views and opinions expressed here are for informational and educational purposes only and may change at any time based on market or other conditions or may not come to pass. This material is not a solicitation to buy or sell securities and should not be considered specific legal, investment, or tax advice. The information provided does not take into account the objectives, financial situation, or particular needs of any specific individual. All investments carry a degree of risk and there is no certainty that an investment will provide positive performance over any stated period of time. Equity investments are subject to company specific and market risks. Equities may decline in response to adverse company news, industry developments, or economic data. Fixed income securities are subject to market, credit, and interest rate risks. As interest rates rise, bond prices may fall. Past performance is no guarantee of future results.