Today’s Markets

HERE ARE THE LATEST trends in the world of investing:

  • The S&P 500 climbed 8.5% in 2020’s third quarter, adding to the second quarter’s 20% surge and helping to offset the first quarter’s 20% slump. These figures don’t include dividends. Since the market bottomed on March 9, 2009, the shares in the S&P 500 have climbed almost 400%, though they remain just 120% above their March 24, 2000, peak—a modest gain over a turbulent 20-year stretch.
  • Amid 2020’s rollercoaster ride, the winners and losers resembled those of recent years: U.S. growth stocks fared better than value shares, while large-company shares held up better than smaller-cap stocks. Similarly, both developed foreign markets and emerging markets once again lagged behind U.S. shares.
  • Treasury bond prices rose and yields fell sharply in 2020’s first nine months, with the benchmark 10-year Treasury note yielding 0.68% as of Sept. 30, down from 1.92% nine months earlier. In early August 2020, the 10-year yield hit a record low of 0.52%.
  • The Federal Reserve slashed short-term interest rates in 2020, as it sought to prop up the slumping economy. One consequence: One-year Treasury bills were yielding just 0.12% as of Sept. 30.
  • Real assets had mixed performance in 2020’s first nine months. Oil prices plummeted to $20 a barrel in the first quarter but recovered to $40 in the second quarter and held there through the third quarter. Real estate investment trusts fell hard during 2020’s bear market, before partially recouping their losses during the strong rally that followed. But the standout performer was gold, which climbed to $1,890 as of Sept. 30, up from $1,520 at year-end 2019.
  • In September, the Federal Reserve projected that the U.S. economy would shrink 3.7% in 2020, with unemployment finishing the year at 7.6% and core inflation running at 1.5%.
  • As of 2019, 52.6% of U.S. families were invested in the stock market, up from 51.9% three years earlier, but below the 53.2% peak recorded in 2007, according to the Federal Reserve’s Survey of Consumer Finances. The survey is conducted every three years.

Want to get a handle on stock and bond market valuations? Check out the chapter on financial markets.

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