The S&P 500 is Going to…

June 4, 2019

Mixed messages in the media can cause confusion among investors as they try to make sense of the details and make investment decisions. What's an investor to think?

Snapshot

  • Sometimes, particularly amid rising economic uncertainty and market volatility, the financial news media publishes stunningly conflicting market analysis.
  • One headline news story says that the S&P 500 is going to go up. The next story says that it’s going to fall.
  • In times like these, we think the most important thing to do is focus on personal investment goals.

Conflicting market commentary

We’ve all seen headlines that seem to promise insight into financial market behavior. In reality, the stories that follow can range from informative analysis to inconsequential fluff. Nevertheless, when taken collectively, they generally provide a relatively consistent big-picture view of the market. But every once in a while — particularly amid rising economic uncertainty and market volatility—we come across stunningly conflicting market analysis, sometimes on the same day within the same media outlet. For example, the following headlines recently appeared right next to each other on a popular stock-market tracking app:

"The S&P 500 to Cross 3,000 by the Third Quarter."
- Bank of America
"S&P 500 due a 10% fall from pre-trade war high, warns strategist."
- MarketWatch

The two articles were almost comical in their contradictory nature. The first predicted a rise in equity prices as strong market performance encourages investors to buy more stock. The second forecasted a drop in stock prices if the U.S. and China fail to secure a trade deal.

Stocks heading up or heading down?

Chart: The S&P 500 Index: Are stocks heading up or down?

Past performance does not guarantee future results. Source: FRED Economic Research as of 5/16/19.

What’s an investor to think?

Mixed messages like these cause confusion among investors as they try to make sense of the details, cultivate their own big-picture market view and use that information to make decisions about 401(k) plans, personal brokerage accounts, corporate pension plans, and endowment and foundation assets.

Professional investors face the same decisions and rely on an even greater variety of data points and information sources in attempt to make sound decisions. They also encounter contradictory messages, as demonstrated by recent debates about whether interest rates are going to rise or fall.

What do you want your money to do?

When faced with confusing market signals, we think the most important thing to do is to remind yourself of what you want to achieve with your investments — and consider whether your current approach supports those financial goals. We call this goals-based investing. This requires identifying exactly what you want your money to do (for example, generate income, grow savings, fund a purchase, or achieve any combination of such objectives) and then (and only then) developing a financial strategy accordingly. It’s an investment strategy that has little to do with what’s happening in day-to-day news and everything to do with the big-picture view of your personal goals.

Index definition

The S&P 500 Index is an unmanaged, market-capitalization-weighted index comprising 500 of the largest publicly traded U.S. companies and is considered representative of the broad U.S. stock market

Legal Note

Important information

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice and is intended for educational purposes only.

There are risks involved with investing, including loss of principal.

Information provided by SEI Investments Management Corporation, a wholly owned subsidiary of SEI Investments Company. Neither SEI nor its subsidiaries is affiliated with your financial advisor.

Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.