The price of oil is once again flirting with $30 a barrel, which is refueling those nagging worries about slower economic growth here at home as well as in China, Europe and elsewhere. Growth fears have been the primary source of downward pressure on global stocks and riskier bonds in 2016, with the result being a “flight to safety” upswing for Treasuries and gold.
U.S. equities are having trouble holding a lead lately. The prevailing pattern has been a hopeful jump at the start of trading that quickly reverses course as nervous investors sell into the brief display of strength. Through Tuesday, the Standard & Poor’s 500 was down about 8% for 2016, making it the worst start to a year ever, and on Wednesday markets opened in the red.
The extreme pessimism in global equity markets so far in 2016 has caught many investors by surprise, and that has contributed to the day-to-day volatility that we’re seeing. We at USAA understand that the market’s erratic behavior may have members worried about the impact on their family’s finances. We can assure members that we take your concerns seriously and that we are here to help you get through this rough patch.
Good luck trying to find a logical pattern in global equity market behavior so far in 2016. On the first trading day of the year, China was down, and that was blamed for European and U.S. stocks being down. Since then, we’ve also seen China up and both Europe and the Standard & Poor’s 500 down, and China and Europe down and the S&P up. And even when the S&P is up, it tends to lack conviction.