Market Data as of Week Ending 07/24/2020 unless noted otherwise.
U.S. stock prices were mixed last week as investor sentiment shifted following employment data and increasing coronavirus cases. Company size was negligible, while value stocks returned to the forefront and outperformed their growth counterparts. Economic sector performance was mixed with declines in healthcare, communication services, and technology that were partially offset by gains in energy, consumer discretionary, and financials. Developed foreign stocks in Europe and Asia outperformed U.S stocks while Emerging Market stocks outperformed both domestic and developed foreign markets.
U.S. Treasury yields declined again this past week. High yield corporate bonds were the best performing asset class, followed by investment grade corporate bonds. Despite the increased demand, investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5.5%.
For the first time since March, initial unemployment claims rose from the previous week (1.31 million to 1.41 million). Meanwhile, the additional unemployment payment under the CARES Act is set to expire at the end of the month, unless Congress and the Administration negotiate either an extension or changes to the program. In Europe, the historic €750 billion stimulus plan gives the EU’s executive branch the ability to raise capital denominated in euros on behalf of all 27 states.
Market Data as of Week Ending 07/17/2020 unless noted otherwise.
U.S. stock prices advanced last week as investors responded to a combination of better than expected corporate earnings and encouraging results for coronavirus vaccine candidates. Small and medium sized businesses returned to the forefront and significantly outperformed their larger counterparts for the week. Economic sector performance was mixed with declines in consumer discretionary and technology offset by gains in health care, industrials, materials, and utilities. Developed foreign stocks in Europe and Asia outperformed U.S stocks while Emerging Market stocks lagged both domestic and developed foreign markets.
U.S. Treasury yields narrowly declined this past week (bond prices and yields move in opposite directions). High yield corporate bonds were the best performing asset class, followed by investment grade corporate bonds. Investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 6%.
Economic data was mixed as manufacturing and retail sales were better than expected, while consumer sentiment retreated from the prior month. Additional stimulus measures remain outstanding but conversations have been intensifying in Europe to work through a proposed 750 billion EU recovery fund. Separately, France is expected to add another EUR 100 billion to support a recovery, bringing the cumulative total to more than 500 billion pledged by the government.
After a rocky end to the first quarter of 2020 across the markets, the second quarter offered a brisk bounce back for investments and that performance can be seen in the Mid Atlantic Trust Company 401(k) Benchmark. The benchmark, which reflects the portfolio performance across 401(k) plans serviced by the company, finished the second quarter up 15.48% for the three months ending June 30, 2020, and now stands at a -3.14% year to date return for 2020.
The performance to date for the 401(k) Benchmark in 2020 mirrors the swings in the major market indices in recent months, as investors react to trials and tribulations around the world of how to deal with the Coronavirus pandemic. These swings have included an all-time high for many of major indices six weeks into the year, followed by a retreat of almost 35% in value over the following six weeks, only to then rally back over the second quarter at a pace that hasn’t been seen in over 30 years. For the hypothetical 401(k) participant*, however, the benchmark shows that their retirement plan statement at the end of June would show their balance to be 99% of where it stood on December 31, 2019 — essentially unchanged and a true testament as to why experts recommend 401(k) participants to “stay the course” even during turbulent markets.
|Nasdaq Composite (Principal Return)||30.63||12.11|
|Dow Jones Industrial Average||18.51||‑8.43|
|Mid Atlantic Trust Co. 401(k) Benchmark||15.48||-3.14|
While the performance of the market has whipsawed back and forth throughout the year, asset allocation has remained fairly constant within the Mid Atlantic Trust Company 401(k) Benchmark. U.S. Stock holdings, which dropped from 57% of holdings coming into 2020 down to 52% by the end of the first quarter, ticked up slightly to 53% of holdings by the end of the second quarter. That slight shift in allocation towards U.S. Stocks came from U.S. bond market holdings, which dropped from 20% down to 19% for the second quarter.
ABOUT THE MID ATLANTIC 401(k) BENCHMARK
Mid Atlantic Capital Group is a leading financial services organization that provides a wide array of brokerage, advisory, and trust services to a diverse national client base of financial advisors and institutions, asset managers, and benefits administrators through its various subsidiary companies. Because we provide these services, Mid Atlantic Trust Company has plan investment data on approximately 95,000 401(k) plans representing approximately $100 billion in assets. Data used for this benchmark uses approximately 31,000 of those plans (see fact sheet for further information on actual sample). In response to requests from our institutional clients, we have created the Mid Atlantic Trust Company 401(k) Composite Benchmark which is designed to reflect the portfolio performance across 401(k) plans serviced, in any capacity, by Mid Atlantic.
For a copy of the full report of the Mid Atlantic Trust Company 401(k) Composite Benchmark, click here.
Contact Mr. Scott Hervoyavich of Mid Atlantic Trust Company at 800-693-7800 or by emailing him at email@example.com.
* For the hypothetical participant balances, we used a starting balance based on the average 401(k) participant balance provided by the Investment Company Institute for the year of the starting balance. In our calculation, we assumed a starting annual salary of $50,000, a combined employee/employer 9% annual contribution rate, and a 3% annual salary increase and applied the monthly rate of return of the benchmark.
Market Data as of Week Ending 07/10/2020 unless noted otherwise.
U.S. stock prices were mixed for the week as large companies advanced while smaller sized companies underperformed. Economic sector performance was also mixed with declines in energy, industrials, and real estate offset by gains in the consumer, financials, technology, and communication sectors. Developed foreign stocks in Europe and Asia lagged U.S stocks while Emerging Market stocks outperformed both domestic and developed foreign markets.
U.S. Treasury yields declined this past week. Most notably, long term yields returned to lows last seen in April. Long term government bonds were the best performing segment followed by investment grade corporate bonds. Within short and intermediate bonds, high yield corporate bonds outperformed as investors seek yield. Investment grade corporate bonds are yielding approximately 2.1% and high yield corporate bonds are yielding more than 6%.
Most of the economic data was overshadowed by a resurgence in coronavirus cases across several U.S. states. By the end of the week, the U.S. reported more than 60,000 daily new cases and over 3 million confirmed cases since the start of the pandemic. Analysts have forecasted that S&P 500 revenue will drop 10% and earnings will decline more than 40% for the second quarter. Despite a trend of higher cases in Tokyo, Japan has relaxed its coronavirus-related restrictions allowing up to 5,000 people at large events.
Market Data as of Week Ending 07/3/2020 unless noted otherwise.
U.S. stock prices advanced as the S&P 500 index recorded its highest quarterly gain (+20.5%) since 1998. Small and medium sized companies generally lagged large companies and growth outperformed, regardless of company size. All major economic sectors ended the week in positive territory, led by gains in real estate, materials, and consumer discretionary stocks. Developed foreign stocks in Europe and Asia lagged U.S stocks while Emerging Market stocks outperformed developed foreign markets.
U.S. Treasury yields were mixed for the week as short term bond yields narrowly declined while intermediate and long term yields nudged higher. Investment grade corporate bonds outperformed both government bonds and high yield corporate bonds, as investors balance credit quality and interest rate risks. Investment grade corporate bonds are yielding approximately 2.2% and high yield corporate bonds are yielding more than 6%.
The June employment report was better than expected, as the unemployment rate declined to 11%, after reaching a peak of nearly 15% in April. Other positive economic reports included rising consumer confidence, a surge in pending home sales, and improving survey data from the manufacturing sector. Global manufacturing data in Europe and China continued to show significant improvement, which are positive signs for a sustained economic recovery.