Pundits Weigh In: Is Equity Market Growth in Slowdown Mode?

equity market growth slowdown trend

Many economists and market watchers point to both national and global indicators that seem to suggest the heady days of continued market growth may be behind us. The stock market is in its 3rd-longest stretch without a new high since 2013, according to Bespoke Investment Group, which had a market commentary recently featured on

"The Dow is around 9.2% lower from its late-January peak, while the S&P 500 is more than 8% short of its peak. By comparison, the S&P 500 achieved a max drawdown of more than 14% during a commodity and emerging-market selloff fueled by worries over China, according to Bespoke," MarketWatch reported.

Bespoke says the current slump hasn’t been unusually dramatic or long, but it has "kept equities in check after a very big run up in late 2017."

Several economic barometers have recently fallen short of expected growth projections. U.S. retail sales fell unexpectedly in January and then failed to meet expectations the following month. The U.S. added 103,000 jobs in March, well below expectations of 178,000, according to The Wall Street Journal, which noted that hiring remained strong.

Goldman Sachs’s global "current activity indicator" weakened notably in March. A record 74% of fund managers polled by Bank of America then said that the global economy was now in its "late cycle," according to a recent article in the Financial Times.

"Given that investors are already growing increasingly nervous about escalating trade tension — global equities have tumbled by more than 8 percent from their late-January peak — the bout of disappointing economic data could not have come at a worse time," the Times reported.

Some Saw a Potential 'Slowdown' Coming

Interestingly, last September CNBC ran the headline: "Second-longest bull market ever aging gracefully, but investors wonder how long it will last."

They reported that since the prior bear market ended in March 2009, this advance in equities is now the second-oldest on record without at least a 20% drop in the S&P 500. "There's broad agreement that markets have been generous for a pretty long time and the trees are stripped of the low-hanging fruit," the article surmised.

Volatility: Back in Style?

"This is the year of volatility," Stephanie Link, managing director and U.S. equities manager at Nuveen, said on "Closing Bell." Link pointed out that there were 28 days in the first quarter alone when the market moved plus or minus 1 percent, compared with only eight times in all of 2017. "This is a time of uncertainty," Link said. "The market doesn't like uncertainty."

Market watchers have been on edge in recent weeks with looming fears of potential trade wars and increased scrutiny in the technology sector, CNBC reported. This kind of uncertainty is making some long-time market watchers nervous. One of them is Art Cashin, managing director at UBS Financial Services and an executive floor governor of the NYSE. Cashin has worked in the securities industry for almost six decades.

"It's a good deal more volatile than almost anything you've seen," he recently told CNBC. "It is unfortunately reminiscent of some of the volatility we saw in '87." Cashin, of course, is referring to the volatile market that began on Oct. 19, 1987, in Asia and swept through Europe to the United States, a.k.a. "Black Monday" and "Black Tuesday." That’s when the Dow Jones industrial average fell more than 500 points—or 22%—in a single day.

Jack Bogle, founder and former CEO of Vanguard, thinks the stock market is more volatile than at any other point in his 66-year investing career. "I have never seen a market this volatile to this extent in my career," Bogle said on CNBC's "Power Lunch" recently. "I've seen two 50% declines, I've seen a 25% decline in one day, and I've never seen anything like this before."

Many are Taking Stock of Their Equity Positions

Of course, it can be a long-term concern for everyone. But it’s not necessarily for people who are preparing for or entering retirement. Without a significant “recovery” horizon, the choices these investors make now, in deciding where to keep or place their retirement nest egg, become of paramount importance.

Investors in the well-known "retirement red zone"— the 10 years just before retirement and 10 years into it — may consider looking at ways to protect their vision for their ideal retirement.

Intensified volatility may undermine retirement money that is intended to provide for a retiree living 20 years, 30 years, or more. That brings up “sequence risk,” or the danger of retirement assets dropping in value just as someone starts to live off savings and income from their investments as well as other assets.

There are many options available to investors who want to consider their options, potentially realign their strategies to their risk tolerance, and take a closer look at how they can turn their assets into retirement income that can last as long as they do.

One Potential Solution

Using annuities and other income-generating solutions can offer the benefits of creating a plan to generate lifetime income. Through their contractual guarantees, they may also help to provide an income guard against market volatility. If you believe that they may be a valuable addition to your retirement plan, be sure to conduct a careful review of your financial situation, and ask your financial professional how -- and if -- they might make sense for you.

“Even aside from the obvious financial security that assured monthly income can bring, payouts that are guaranteed not to go down no matter how much the market may fall can also yield valuable emotional and psychological perks,” according to a report on “A variety of studies and surveys show that retirees who have guaranteed income in the form of a pension or annuity tend to be happier in retirement than those who don't.”

Start Planning Today for Retirement Success

As investors, we have financial portfolios. And thanks to longevity risk, we have to make sure that they last as long as we do. What better time than now to consider all income strategies and determine if your current financial plan is likely to help you meet your goals.

Don’t let any surprises cause you to put off the retirement you have been daydreaming about for decades. Consider these findings from a recent Hartford Fund survey: 26% of respondents planned to work longer than they had hoped as a result of financial hardship related to the recession, and 25% planned to change jobs or take on additional jobs.

Professional financial guidance for your situation will help you better prepare for a bountiful retirement.

When you are ready, financial professionals at stand ready to help you. Use our "Find a Financial Professional" section to connect with someone directly. Should you need a personal referral, call us at 877.476.9723.

Author: Ian

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