2018: The Year When Nothing Worked

By Brent Schutte via Iris.xyz

2018 will be broadly remembered as a year when nothing worked and daily stock market volatility spiked. This contrasted with 2017 where seemingly everything pushed higher, and volatility was low. But in 2018, nearly every single asset class and all but one major stock market index (Brazil) around the globe posted negative returns.

International markets sagged earlier in the year and U.S. equity markets finally felt the pain in the fourth quarter. After hitting an all-time high on Sept. 20, 2018 and then coming within a whisker of that record intraday on Oct. 3, 2018; the S&P 500 began a sharp move lower that eventually reached a 19.4 percent total decline on Christmas Eve. The index then reversed course and staged a stunning 5 percent rally on the day after Christmas and inched higher, finishing the quarter with a 13.52 percent loss.

For the entirety of 2018, the index fell 4.4 percent. But that masked the widespread damage as only 3 of the 11 sectors produced positive returns, with cumulatively five down more than 12.5 percent. U.S. mid-cap and small-cap stocks fared worse, falling 11.1 and 8.5 percent respectively. This downward move was swift, and it was the 10th worst quarterly return for the S&P 500 dating back to 1950.

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