Today’s market update…Political Pressure

The drama surrounding Washington  finally caught up to the U.S. equity markets, as the political turmoil pressured stocks in a spike of volatility a sharp sell-off. US markets began today’s session with heavy losses on reports that President Trump asked then FBI Director Comey to end the investigation into former National Security Advisor, Michael Flynn.  Major news networks and websites flashed terms like “Impeachment” and “Constitutional Crisis.”  With the close of today’s trading, the Dow Jones Industrial Average (DJIA) tumbled 373 points (1.8%),  the S&P 500 Index lost 43 points (1.8%), and the Nasdaq Composite plunged 159 points (2.5%). Volume on the Nasdaq was heavy and it had its worst day since June of last year.

So far this year, and since the election, the markets have benefited from good earnings and economic developments that have provided a shock absorber for  policy disappointment and seemingly unending political drama.  Indeed, that appears to have changed today. Accompanied with today’s heavy market decline was a significant spike in volatility.  The volatility index, VIX, soared  46% to 15.59, its biggest daily climb since after Brexit, (last June’s exit of the EU by Britain).

Your account’s allocation has benefited greatly so far this year from carefully selected growth and dividend stock holdings.  While we  remain optimistic about the outlook of your holdings, we are becoming increasingly cautious. Today, international food giant General Mills (GIS), was added.  This a proven defensive stock that provides nearly a 3.5% dividend.  We expect quality holdings like GIS, cash reserves, gold exposure and currency hedges will benefit your account should high volatility persist.  We are confident that maintaining our diversified allocation plan is the most prudent approach to reduce risk.

Be assured we are actively monitoring your account and will strive to strategically preserve gains and protect principal.