Global stocks seemed poised to close out January on a strong note, but that changed quickly in the last days of the month as fear about the coronavirus drove stocks down.
US large-caps stocks held up best
The technology-heavy NASDAQ 100 was one of the few major indexes with gains in January, up 3.0%. The S&P 500 was flat, while the Dow Jones Industrial Average lost -0.9%. The small-cap Russell 2000 Index sank -3.1%.
Developed foreign markets (as measured by the MSCI EAFE Index) lost -2.8%, and emerging markets plunged -6.2% for the month.
Bonds gained as nervous investors loaded up on Treasuries and other bonds, and interest rates fell. The 10-year Treasury yield slid fairly dramatically from 1.92% to 1.51%. The Bloomberg Barclays Aggregate US Bond Index was up 2.0%.
During prior crises, stock markets proved resilient. While stocks took a short-term hit from disease-related worries, they tended to bounce back in the following months. Charles Schwab looked back at 13 outbreaks since 1980 and found that the MSCI World Stock Index averaged modest gains in the six months following an outbreak. But this time could be different. There’s no way to know with certainty.
How can fund investors prepare for changing markets?
- Stay focused. Try not to let current events distract you from your long-term investment goals.
- If you’re feeling anxious, review your plans to reach your goals.
- Consider your allocation to stocks and bonds. This should help you stay on track during challenging periods in the markets.
- Make sure you have an active strategy or an advisor who can help you navigate changing markets.
If you don’t have an investment plan or you need help bringing all the pieces together into a plan, then it’s time to think about working with an advisor. Click here to set up at time to talk with a FundX advisor or click the button below.