After 2021 Lull, Stock Market Volatility Is Back

Chart of the Week: After 2021 Lull, Volatility Is Back

It takes courage to invest in markets as volatile as the ones we’ve recently experienced. So far this year, the S&P 500 has moved by 1.2% on average each day. While there are many trading days left this year, if this trend were to continue through December, it would make 2022 the fifth most volatile year since the index’s 1957 inception.

After last year’s smooth sailing, where the S&P 500 barely fell 5% from a prior high, this year has provided more of a challenge to investors. While it may seem irrational for the market to be jumping all over the place, I think it’s defensible. Investors haven’t had to contend with a European war and high inflation in decades. When you add the Fed raising interest rates to the mix, the uncertainty level rises even higher. As traders try to make sense of the moving landscape, prices will continue to bounce around day to day.

Your best defense as a long-term investor is to try and turn down the noise (this is often easier said than done). That doesn’t mean you stick your head in the sand and hope everything blows over. As a client of Adviser Investments, you never have to face volatile or uncertain periods alone—we’re with you every step of the way, keeping an eye on your portfolio and financial plan.

Is the stock market acting normally?
Note: Chart shows average daily change for the S&P 500 index on an annual basis from 1/1/1958 through 3/16/2022. Sources: S&P Dow Jones Indices, Adviser Investments.

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Chart of the WeekchartoftheweekJeff DeMasoMarket volatility