The Surprising Second Quarter Stock Market Results

If you’re a regular reader of Savings Beagle, you’re likely familiar with my quarterly stock market recaps in which I discuss the market returns for the previous quarters.

I wrote, “Have You Checked Your 401(k) Lately?” to cover the fourth quarter of 2015, and for the first quarter of 2016 I wrote, “The Stock Market Beat Goes On.”

These pieces aren’t provided to show exactly how the stock markets are doing; rather, they’re an illustration of a big picture economic situation that makes saving money so vitally important.

Stock market returns should be of interest to everyone, even if you personally don’t own a single stock.

Often, people don’t connect that IRAs, 401(K)s and other retirement accounts are made up of stocks.

And almost never is it considered that public and private pension plans rely on solid investment returns, much of which come from stocks, to ensure they’re able to meet their future obligations.

I’ve written how pensions normally require 7-8% investment returns annually to guarantee the payments they’ve promised.

And if you’ve ever used a retirement calculator (which is what many financial advisors enlist to help guide their advice) those, too, rely on a 7-8% annual return for the long-term calculations they provide.

Which is great when the economy is doing well and stocks are benefiting.

But it’s not so great when the economy is languishing – as it has been since the Great Recession – and the stock markets have been moody as a result.

In my January piece, I showed how the three stock market indices; the Dow Jones Industrial Average (down 2.23%), the Nasdaq Composite (up 5.73%) and the S&P 500 (down 0.73%) had all missed the magic 7-8% mark for the final quarter of 2015 – some by a large margin.

And my April post showed the Dow Jones Industrial Average (up 1.79%), the Nasdaq Composite (down 2.75%) and the S&P 500 (up 0.77%) still falling well short of that magical 7-8% return goal.

So, with the past two quarters showing limited growth, I thought I’d give an update on how the markets fared during the second quarter of 2016.

For the second quarter – April 1, 2016 to June 30, 2016 – the Dow Jones Industrial Average was up 244.90 points or 1.38%

The S&P 500 for that same period was up 39.11 points or 1.90%

And the Nasdaq was down 27.18 points or 0.56%

For the first six months of 2016, the Dow has shown a percentage increase of 2.90%, the S&P 500 an increase of 2.69% and the Nasdaq a decrease of 3.29%.

Which is where the surprising in my title comes in.  If you didn’t look at the numbers, and only listened to the news, you’d likely think the markets are doing fairly well.

And, for a number of stocks, there have been increases, but, again, nowhere near the 7-8% needed to meet the long-term targets pensions and other investment vehicles need to achieve their goals.

A recent story in The Wall Street Journal titled, “Calpers Reports Lowest Investment Gain Since Financial Crisis,” discusses how the California Public Employees’ Retirement System (Calpers) failed to hit its internal investment target for the second straight year.

The link above is behind The Wall Street Journal’s pay firewall – if you’re not a subscriber you won’t be able to read it – but this link, “Largest US Pension Fund Suffers Worst Annual Return Since Financial Crisis Due to Heavy Stock Losses,” will give you an overview and commentary on the article and situation.

Since the end of June, we’ve seen significant increases in the markets – some reaching all-time highs.

That’s great news. Those gains are much needed to get annual market returns back to where they need to be.

Let’s just hope those gains hold. We’ve had similar jumps recently, only to see the markets retreat to lower levels and limited quarterly gains.

Now for my “stock” ending to these quarterly update posts.

We at Savings Beagle are not investment advisors. Our goal is not to guide your investment decisions or sell you investment products.

Rather, this, and previous articles, are presented only to get you thinking about your long-term financial situation.

The stock market very well may increase its returns for the remainder of 2016, helping IRAs, 401(K)s and pension plans move toward their projected goals. But, on the other hand, the market may not.

A sound financial lifestyle is an important component to ensuring long-term fiscal stability. And saving money, wherever you can, plays a large part.

Which is where Savings Beagle comes in. We’re here to find deals and pass along tips that’ll save you money, and help keep you on a sound financial course.

If you haven’t already, bookmark our site, follow us on Facebook, join us on Twitter or subscribe to our posts to ensure you receive every savings opportunity we’re able to pass along.

Saving money and planning for the future’s hard; we’re here to help make it a little easier.

investment charts courtesy of morningstar.com

image courtesy of Stuart Miles at freedigitalphotos.net