Weekly Market Update With Brian Ransom 22 October 2021
Welcome to the weekly market update from Signature Wealth Management. I’m Brian Ransom, Research Director from Signature Wealth and here’s what happened in the market this week.
It appears that the September pullback is over for now. Peak-to-trough, the market declined about 5% and has since broken out back towards new all-time highs.
In the news this week, the first bitcoin ETF began trading. The ETF from ProShares trades in bitcoin futures and not bitcoin itself but had significant fund flows on its opening day. New results from a very large Pfizer vaccination trial showed 95.6% effectiveness against COVID-19 and its delta variant. And Chinese real estate giant Evergrande made an overdue payment on a defaulted bond according to Chinese state-owned media.
Covid-19 cases continue to fall at a rapid rate. The percent of the US population with two vaccinations is at 57%. The rise in delta variant cases beginning in July of 2021 appears to be the primary cause of the stock market slowdown throughout the third quarter. The fall in Covid-19 cases very closely correlates to the end of the September downturn and the S&P 500 has rallied on this news.
In fact, if you carefully examine the rally and subsequent September downturn in the S&P 500, you can see exactly what I’m talking about. While the decline in the S&P 500 began in September, the broader stock market as measured by the Advance-decline line shown in red actually began in July. Meaning that most stocks entered into a correction right when the delta variant began its surge. The S&P 500 didn’t catch up until September because the largest stocks in the index didn’t begin their decline until that point. However, now that Covid-19 cases have subsided, the Advance-decline line actually began to rally ahead of the S&P 500 indicating that the September pullback would be short-lived. Currently, the S&P 500 rally is seeing much broader participation in the wider stock market beyond just the largest stocks further indicating that the market is in good shape.
For more information on this topic or a variety of other topics including market updates, financial planning, and wealth management please like, subscribe, and follow and we’ll see you next week.
1.FactSet Research Systems. (n.d.). S&P 500 (Interactive Charts). Retrieved October 21, 2021, from FactSet Database.
2.The Center For Disease Control and Prevention. “COVID Data Tracker” Trends in Number of COVID-19 Cases and Deaths in the US reported to CDC, by state/Territory. Retrieved October 22, 2021 at https://covid.cdc.gov/covid-data-tracker/#trends_dailycases
3.FactSet Research Systems. (n.d.). S&P 500 & United States Advance/Decline line (Interactive Charts). Retrieved October 21, 2021, from FactSet Database.
Signature Wealth Management Group is registered as an investment adviser with the SEC. Signature Wealth only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements.
Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change.
Information contained herein does not involve the rendering of personalized investment advice, but is limited to the dissemination of general information.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. The use of words such as “will”, “may”, “could”, “should”, and “would”, as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements.
Information is not an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein.
The S&P U.S. Style Indices measure the performance of U.S. equities fully or partially categorized as either growth or value stocks, as determined by Style Scores for each security. The Style series is weighted by float-adjusted market capitalization (FMC), and the Pure Style index series is weighted by Style Score subject to the rules described in Index Construction.
All information presented prior to an index’s Launch Date is hypothetical (back-tested), not actual performance. The Index returns shown do not represent the results of actual trading of investable assets/securities. S&P Dow Jones Indices LLC maintains the Index and calculates the Index levels and performance shown or discussed, but does not manage actual assets. Please refer to the methodology paper for the Index, available at www.spdji.com for more details about the index, including the manner in which it is rebalanced, the timing of such rebalancing, criteria for additions and deletions, as well as all index calculations.