The Standard and Poor’s (S&P) 500 has registered a year-to-date return of 5.6% ending September 30th. So far, this result compares unfavorably to an S&P 500 average annual return over the last 50 years of 10.9%. However, it is fair to characterize this year as anything but average.
We have experienced the most widespread pandemic in a century, weathered the largest ever second quarter decline in real Gross Domestic Product (GDP) growth, seen the highest unemployment rate since the Great Depression and of course are keeping an eye towards an impending and contentious election.
The economic data over the last month has continued to improve but the breadth of improvement has narrowed. Additionally, the marginal rate of improvement has diminished, though that is to be expected as the initial phase of the recovery comes to an end. The second quarter saw a massive decrease across the data spectrum, while the third quarter can be characterized as an almost commensurate rebound in those figures. This dynamic seen in the macro environment is also present in corporate earnings results and estimates.