Charles Schwab

As expected, the Federal Open Market Committee (FOMC) raised the fed funds rate by 50 basis points, to a range of 0.75% to 1.0%.

It was quite a month.

Stock prices and bond yields have been moving in opposite directions this year.

U.S. stocks fell Friday, extending a run of weekly losses into its third straight week, as investors reacted to a handful of disappointing earnings reports and the Federal Reserve’s increasingly aggressive language about future interest rate increases.

Recession chatter has picked up increasingly for numerous reasons, not least being the spike in oil prices, slowdown in economic growth estimates, and the Fed's transition from accommodative to tighter monetary policy.

The "end of globalization" is a phrase that has come up a lot lately.

There is no shortage of headwinds facing both the market and the economy: the tragic Russian invasion of Ukraine and attendant commodity/energy crisis; the Federal Reserve's transition from accommodative to tighter monetary policy; and increased chatter of a recession on the horizon; among others.

For the past month, investors have been focused on the war on Ukraine and the economic impact of sanctions.

Preferred securities prices have fallen sharply, presenting an attractive entry point for income-oriented investors who can ride out the volatility.

You’ve researched the nuts and bolts of cryptocurrencies and considered whether you should invest in them.

Unfunded pensions for state and local governments were once expected by some to sink the whole market.

Bouts of market volatility are an unnerving, but normal, feature of long-term investing.

The Federal Reserve announced a 25-basis-point increase in the target range for the federal funds rate, to a range of 0.25% to 0.50%, its first rate hike since December 2018.

The past isn’t a perfect predictor of market behavior, but it has proven to be a useful guide.

The Russian invasion of Ukraine overturned a lot of assumptions about the near-term direction of the global economy.

We're changing all our sector calls to "neutral" until there's more clarity on how the Russia-Ukraine war will affect the global economy.

The war between Russia and Ukraine—and subsequent economic and financial ripple effects—has exacerbated stress in global markets and ushered in an acute risk-off environment.

After living through more than two years of COVID-19, its variants, and the attendant supply-chain disruptions and inflation concerns, one thing is clear: Uncertainty is the only certainty.

Markets have already reacted to the threat of a Russian invasion of Ukraine in a textbook manner akin to prior similar events that we have outlined in prior articles on January 31 and February 22.

Preferred securities are a type of investment that generally offers higher yields than traditional fixed income securities, such as U.S. Treasury securities or investment-grade corporate bonds.

In an apparent desire to create a weakened border state unable to join NATO, Russia supported separatists in eastern Ukraine by recognizing the independence of two regions: Donetsk and Luhansk. In support, Russia ordered “peacekeeping” troops to the areas, prompting sanctions by world powers.

U.S. and global stocks fell sharply Thursday amid fear of a potential Russian invasion of Ukraine and ongoing concern about inflation.

Most investors are probably less diversified than they think they are.

In recent weeks, it has felt like the U.S. stock market slips a gear every so often, dropping sharply as investors search for traction in uncertain terrain.

After “whisper” estimates for the December jobs report, out last Friday, had plunged well into negative territory, payrolls instead jumped by 467k—well above the official consensus of only 125k, and close to twice the highest Bloomberg estimate.

U.S. and global stocks fell sharply Thursday as global interest rates rose and certain sectors posted weak earnings.

The Federal Reserve has indicated it plans to start raising short-term interest rates soon.

Markets appear to be reacting to military developments in Ukraine.

The Federal Open Market Committee (FOMC) of the Federal Reserve did not make any formal changes to its policy, but did signal it would begin raising the fed funds rate soon.

Last week, U.S. Treasury bond yields, climbed back to their pre-pandemic levels.

The Federal Reserve dealt the bond market a sharp body blow on January 5th with the release of the minutes of its last Federal Open Market Committee (FOMC) policy meeting in December 2021.

“Jobs day” last Friday was a bit of a dud.

A change in fundamentals could make international bonds more attractive.

Despite the strong year for stocks in 2021, markets have confidently priced in some negative trends gathering more momentum in 2022 which may help markets, should trends reverse.

The semiconductor shortage and its impact on everything from autos to smartphone production has been much in the news. The shortage has been a boon for semiconductor stock prices. But it likely will resolve itself in the coming months—or years, depending on whom you talk to—raising the specter of a bust.

Some of the market’s recent pressures are showing signs of easing.

The FOMC upped the pace of tapering—now expected to conclude by March—with three rate hikes expected in 2022 per its “dot plot.”

Investor sentiment is one key to shorter-term market swings; with euphoria preceding September’s and late-November’s pullbacks; but better conditions in place … for now.

Given all the municipal bonds to choose from, how do you decide which ones should make up the core of your portfolio? With $3.9 trillion of muni debt outstanding¹ spread among tens of thousands of issuers, the choice may seem daunting, but we’ll help you break it down.

Ever since the Federal Reserve started hinting it was planning to end its ultra-loose monetary policy, bond yields have been falling. That it happened in a booming economy with the highest inflation readings in nearly 40 years has taken a lot of investors and analysts by surprise.

Inflation continues to be a concern these days, and many investors are looking for investments that can keep pace with, or hopefully beat, the rate of inflation. As a result, Treasury Inflation-Protected Securities, or TIPS, have become a popular investment option.

As we wrote about in our 2022 Global Outlook, COVID-19 is becoming endemic rather than pandemic. We anticipate a winter wave of COVID, potentially with new variants like omicron.

The S&P 500 index is up more than 20% so far this year, but more than 90% of its member stocks have had “correction” level drawdowns—more than 10% from a peak—at some point this year. In short, while overall stock market performance has been strong, there has been a lot of churn beneath the surface.

Bear with us as (no pun intended) you read this longer-than-usual outlook!

U.S. and global stocks fell sharply Friday amid spiking fears about a new COVID variant, named Omicron, emanating from South Africa, where it’s spreading quickly. The S&P 500, Dow Jones Industrial Average and Nasdaq Composite indices closed down more than 2%, while the Russell 2000 fell nearly 4%.

A high tide of growth, aided by a sea change in fiscal policy, is likely to help float the global economy safely over the rocks of risks in 2022, despite waves of worries emanating from COVID, inflation, shortages, and rate hikes.

Current low yields and tight spreads in the municipal bond market have made it difficult for investors to find opportunities to earn attractive interest income on their investments. We expect that to change in 2022.

Rarely is there any sector that has everything going for or against it—and that is true today of the Information Technology sector.

You’ve researched the nuts and bolts of cryptocurrencies and considered whether you should invest in them. Now you want to participate in the cryptocurrencies market. How do you do it?

Bitcoin and other cryptocurrencies have been growing in popularity, but if you’re considering investing in them, there are some key things you should know first.

So what is cryptocurrency? Should you invest in it? How can you invest in it? We’ll cover all three topics in this and related articles. For now, here are answers to some of the most common questions about the basics of Bitcoin and other cryptocurrencies.

With less than two months left in what has been an extraordinary (and mystifying) year on multiple fronts, stocks have maintained a largely uninterrupted trek higher (at the index level) in the face of myriad headwinds...

Liz Ann Sonders shares her perspective on the U.S. stock market and economy in this monthly Market Snapshot video.

After a year of supply shortages, the global economy may be closer to the end of the supply chain problems than the beginning.

The Federal Open Market Committee (FOMC) announced the start of balance sheet tapering at a pace of $15 billion per month ($10 billion of Treasuries and $5 billion of mortgage-backed securities). They made no change to the fed funds rate, which remains near the zero bound.

Earnings season has been stellar so far, although the growth rate is well off its prior quarter peak, with profit margins in focus looking ahead.

Signs are growing that inflation may be more tenacious than originally expected. We don’t believe a return to 1970s-style inflation is likely, but there is a worrisome scenario in which persistently sharp increases in prices could be a factor to reckon with—and if history is any guide, they could have an impact on sector performance.

Services make up more of the economy, jobs, and the stock market. The time has come to focus on services data to get a sense of the overall economic picture.

The speculative exuberance around special purpose acquisition companies (SPACs) seems to be over, but investors still have questions about them.

The age of abundance has given way to an age of scarcity, while the pro-cyclical version of inflation may have given way to the counter-cyclical version.

Supply chains typically aren’t something the average person needs to think about too much. When they’re working, these high-tech, globalized networks of parts suppliers, assemblers, shippers, and distributors allow companies to make and move goods around the world so quickly and cheaply that it’s tempting to take them for granted.

September closed with a whimper (from folks hoping the seven-month stretch of positive performance months for the S&P 500 would make it to eight). The month also held true to the history of September being the worst month for performance on average since the index’s inception in 1928.

Looking ahead, new sources of inflation may continue to arise. Unless the mounting pressures push inflation to significantly higher levels that would provoke central banks into aggressive tightening, the impact on global stock markets may be a positive.

There is a cost to waiting for interest rates to rise—you may be missing out on higher coupon rates and yields elsewhere. Rather than waiting on the sidelines for yields to rise, investors should consider short-term corporate bonds today—specifically those with fixed coupon rates.

U.S. stocks fell Tuesday on persistent concerns over the debt ceiling, along with a continued increase in Treasury yields. The S&P 500 closed down 2%, the Nasdaq fell 2.8%, and the Russell 2000 fell 2.3%.

The performance momentum could continue with the reopening of the nation’s capital reinvigorating economic growth, the strong upward trend in revisions to analysts’ earnings estimates for Japanese companies, lower relative valuations, and a historically bullish pre-election period.

It was 35 years ago this month that I began my career on Wall Street. In thinking about those three-and-a-half decades, I decided to shift tack with today’s report and ask readers to indulge me as I ruminate about what I’ve learned during these decades.

House Democrats have proposed a higher top individual tax rate and changes to the capital gains tax. Both are a long way from becoming law.

The bond market has been in hibernation for months, and investors may have become complacent about risks.

Over the past 70 years, rising government debt generally has been accompanied by weaker economic activity. But it’s not a simple relationship.

A gradual slowing of stimulus heralds a potential drop for the world’s stock markets, but the evidence suggests a possibility for a positive outcome.

How do you choose between corporate and municipal bonds? Both have characteristics that can be useful in your portfolio, depending on your goals and circumstances, but they’re not right for every situation.

Now that the dollar is near the year’s highs, can the rally continue? We believe it can in the near term, although our longer-term view is more nuanced. Here’s what we see ahead.

Special purpose acquisition companies (SPACs)—also known as blank-check companies—have gained immense popularity among investors since the beginning of 2020, despite being around for decades.

Supply chain issues are worsening again, reversing improvements seen earlier this summer.

The stock market could use some mouthwash.

The latest major initiative from the White House—a package of social measures known as the American Families Plan, comprising expanded child care assistance, two years of free community college, universal prekindergarten, and more—includes proposed tax increases on the wealthy to help fund the plan.

As the Federal Reserve transitions from merely talking about tapering its bond holdings to actually tapering, investors may be left wondering what it might mean for the markets and their portfolios.

Although the prospect of the Federal Reserve tapering its bond purchases has unsettled markets in the past, we expect it to be more orderly this time around.

News about Bitcoin and other cryptocurrencies, much like hearing about a neighbor who won the lottery, have been impossible to ignore lately.

China’s stock market pullback this year has been in line with the average annual drawdown; historically, this volatility has tended to produce double-digit annualized gains.

As expected, in a unanimous vote, the Federal Open Market Committee (FOMC) of the Federal Reserve (Fed) kept the fed funds rate unchanged in its range of 0-0.25%.

In what shaped up to be a very impressive first half of the year for both the economy and stock market, stellar earnings growth has been a key ingredient.

COVID-19 resurgences appear to be the primary driver of moves across many markets this year.

For investors considering preferred securities today, there is good news and bad news.

In the last few weeks, stock market leadership reversed back to lockdown-era defensives as the stock market made new all-time highs.

More than 75% of the West is in an extreme or exceptional drought, with over 58 million people living in a drought area—and expectations are that it will get worse.

There is always a lot of controversy around the implications of high and rising government debt. Over the past 70 years, rising government debt has generally been accompanied by weaker economic activity.

Inflation continues to be a concern these days, and many investors are looking for investments that can keep pace with, or hopefully beat, the rate of inflation

It is possible that good data could be interpreted as bad news for the U.S. stock market at least in the near-term as strong economic data, especially on jobs, could prompt the Fed to unwind earlier.

The Fed made no changes to its interest rate or balance sheet policies; but some of the language in its statement was tweaked, reflecting recent hotter inflation data.

To get the facts, sometimes you need to look beneath the surface.

Liz Ann Sonders shares her perspective on the U.S. stock market and economy in this monthly Market Snapshot video.

The recovery is now over; a new global economic expansion has begun.

Second quarter is likely the peak growth rate for both the economy and corporate earnings; with positive economic surprises waning.

Is the stock market disconnected from the economy?

While it’s very early to say the rise in inflation has passed, there are signs that the fastest part of the rebound in inflation might soon be over.

In a complete reversal from what was expected roughly a year ago, the outlook for muni issuers is much brighter.

Bitcoin and other cryptocurrencies have been getting a lot of attention lately.

A boom in spending has stirred fears of economic overheating, which has coincided with a surge in commodity prices and a lift in traditional inflation metrics.

With commodity prices soaring, money supply growth exploding, and government spending surging, there is a palpable fear of a return to 1970s-style inflation.

Special purpose acquisition companies (SPACs)—also known as blank-check companies—have gained immense popularity among investors since the beginning of 2020, despite being around for decades.

Economic and earnings data are in boom territory, with more momentum likely near-term.

Inflation is likely to rise in 2021—but will the rise be sustained? That seems to be the million-dollar question lately.

This week’s unveiling of the American Families Plan, the latest proposal from the White House, makes it clear that President Joe Biden is serious about pursuing some of the individual tax increases he called for during the 2020 campaign.

In recent months, two investment themes have been rewarding investors with outperformance: defense sector companies and those participating in share buybacks.

Although it’s early in the first quarter earnings reporting season, it’s worth a look at the progress so far and the implications for the rest of the season, as well as valuations.

Hundreds of years of history shows us that investment bubbles have been a regularly occurring feature of the financial markets.

Floating-rate notes can help lower a portfolio’s sensitivity to interest rate changes, but they aren’t necessarily the secret weapon to combat a rising-rate environment.

As Shakespeare might put it, “full of sound and fury, signifying nothing” is perhaps an apt way to describe the character of the market so far this year.

Policymakers in major economies have pointed to 2023 as the date the stimulus payback may begin.

I am often asked by investors why we do not have formal tactical views on growth vs. value like we do on large caps vs. small caps.

We are often asked if the U.S. dollar will lose its status as the world’s reserve currency.

This probably isn’t the start of a bear market, but it may feel like less a bull market compared with last year’s charge.

U.S. economic growth is accelerating as vaccinations rise and social-distancing measures ease, but hopes for a long-lasting spending boom may hit a couple of speed bumps. Vaccine rollouts in major countries are proceeding at different speeds, but stock market performance contradicts what vaccination data would seem to imply for investors. Meanwhile, inflation-adjusted longer-term Treasury yields have risen as investors anticipate stronger economic growth.

Is the stock market disconnected from the economy? Perhaps, but less so lately.

“Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” -Investor and mutual fund manager Sir John Templeton

What’s a “zombie company”? You may have heard the term in the financial media recently and wondered if it’s something you should be worried about.

Accelerating growth is generally a good thing for stocks, evidenced by bond yields and stock prices typically rising and falling together.

The late-February spike in U.S. Treasury bond yields sent ripples throughout the global markets. As yields surged to the highest level in a year, stocks and commodities sold off sharply, while the dollar rallied.

Looking at the latest economic data reveals V-shaped recoveries in many goods-based indicators; while services has more catch-up to do.

The Year of the Ox looks bullish for China with economists and analysts forecasting GDP growth of 8.1% and earnings growth of 18% for the MSCI China Index. But February holds key developments for China that could impact this outlook, including stock delistings, trade, and COVID-19.

Hope is high that economic growth will accelerate as more people are vaccinated against COVID-19, but so far economic data has been lackluster. Meanwhile, bond investors are expecting inflation despite signs that the economic recovery’s momentum may be stalling. Why does everything seem so disconnected?

This is a new type of exchange-traded ETF that is built differently from a traditional ETF.

As quickly as it soared to the moon, GameStop came back down to earth; but the lessons learned are key to turning day trading speculators into longer-term investors.

The COVID-19 crisis opened up cracks in the muni market, but we don’t expect those cracks to alter the reality that municipal bonds can be a relatively conservative investment option. Many municipalities are under stress, but that’s not a reason to avoid munis, in our view.

When investors talk about “the stock market” they are most often referring to an index that tracks stocks only in their home country. This “home bias” is evident when it comes to the make-up of investors’ stock portfolios. Investors around the world tend to hold mostly domestic stocks.

As expected, the Fed kept rates unchanged; but did make clear its view that vaccines are key to the trajectory of the economic recovery.

Bank loans offer some of the highest yields in the current interest rate environment. We believe their unique characteristics may prevent many investors from considering them, but it may be a mistake to overlook them.

As a review of the year that was, today’s report analyzes and dissects the nature of the K-shaped recovery in both the economy and stock market.

Their decisions in the coming months could have an impact on the markets and investors.

Joe Biden takes the Presidential oath of office this week in the U.S., marking the end of a long U.S. political contest; a year of political challenges is just getting started overseas.

The new year kicked off with a sharp rise in Treasury bond yields, despite unprecedented political turmoil and signs that the economic recovery is slowing.

U.S. stocks have continued to climb amid optimism about a vaccine-led economic recovery, but it’s a narrow path—buoyant investor sentiment could easily be deflated by bad news. Although global economic growth has struggled, an acceleration in vaccinations in major countries could support stronger growth in the second quarter.

It has been an extraordinary start to 2021 in the nation's capital. The images of a mob protesting the outcome of the presidential election by overrunning the U.S. Capitol building on January 6^th are already seared into the nation’s collective memory. A week later, the House of Representatives, for the first time in American history, impeached a president for a second time.

Last week was shocking and extraordinarily sad; and as if Americans didn’t have enough with which to contend, it was capped off by a weaker-than-expected December jobs report.

LIBOR is still being retired, just a little later than initially expected.

While Election Day is two months in the rearview mirror, the election is not over. A runoff election in Georgia on Tuesday, January 5^th, will determine the balance of power in the U.S. Senate, a historically unprecedented scenario that will have a profound impact on President-elect Joe Biden's ability to move his policy agenda forward in the first two years of his presidency.

After a powerful rally for stocks for much of 2020, let’s take a look at the biggest potential downside risks for investors in the year ahead. While none of these scenarios make our base case for 2021, a review of the top investment risks in greater depth may be prudent as we enter the New Year.

As expected, the Federal Reserve’s Federal Open Market Committee (FOMC) voted unanimously to keep the federal funds target rate in a range of zero to 0.25%; where it’s been since March. A majority of FOMC officials maintained their forecast that the rate would be kept near zero at least through 2023.

September 2 was a momentous day on several fronts. It was the initial pop to all-time highs for both the S&P 500 and NASDAQ; after an impressive run from the March 23 pandemic low. It was also a turning point in terms of market leadership; reflecting budding optimism about a turn-for-the-better in economic data.

Encouraging news about COVID-19 vaccines has boosted hope for stronger economic growth, kicking off a rotation in stocks and equity sectors as investors look to a brighter future. However, near-term volatility is possible, as we’re not yet out of the coronavirus tunnel.

Key Points

• A COVID-19 vaccine could start being administered globally this week.

• The planned rollout is good news that has lifted the stock markets around the world. But the reality of the rollout faces risks that could extend the time frame for mass immunizations.

• We expect markets to be volatile in coming months while the threat of new lockdowns weighs against the hope of recovery, although we believe we may be on the verge of a period of international stock market outperformance.

Given all the municipal bonds to choose from, how do you decide which ones should make up the core of your portfolio? With $3.7 trillion of muni debt outstanding¹ spread among tens of thousands of issuers, the choice may seem daunting, but we’ll help you break it down.

With COVID-19 vaccines on the horizon, the longer-term economic outlook appears brighter.

We expect the municipal bond market to return to a sense of normalcy in 2021.

It was a bumpy ride for corporate bond investors this year. After the sharp, pandemic-driven selloff in February and March, total returns for most corporate bond investments have climbed their way back into positive territory.

Ten-year Treasury bond yields may rise as high as 1.6% in 2021, reflecting prospects for faster economic growth.

This week’s report will look at last week’s market moves in the wake of positive vaccine news (with additional and even better news today); but will also review our most recent tactical recommendation change.

Actual third-quarter earnings may be less important than what business leaders say about their expectations.

Investors looking past the presidential election for the next market-moving news break were rewarded earlier this week when Pfizer announced that it had made some headway in the fight against COVID-19.

Stock market performance during the transition period between outgoing and incoming U.S. presidents tends to be more dependent on the economic cycle than the election results.

The Fed did not add to this week’s uncertainties and kept rates unchanged, while also providing no new information with regard to its balance sheet.

Investors likely have many questions about the 2020 election. Votes were still being counted late Wednesday, but here are answers to some of the most frequently asked questions we’re hearing.

While the election remains too close to call, investor attention will soon turn back to Capitol Hill, where senators will reconvene on Nov. 9 and House members on Nov. 16 for what is known as a “lame duck” session of Congress.

There are many major policy decisions that will influence the outlook—trade, energy, taxes and budget deficits, and pandemic relief. However, it’s difficult to assess how these issues will be addressed post-election, and even more unpredictable how the market will react.

For the third time since the COVID bear ended its short havoc, U.S. stocks went into pullback mode—culminating in the worst week since March. The virus itself continues to be a culprit; with another surge in cases and hospitalizations; although not for deaths, at least not yet. The lack of a fiscal relief package and heightened election uncertainty are also to blame.

Stocks tumbled again on Wednesday, as worries about rising COVID-19 cases and hospitalizations sent investors toward the safe havens of U.S. Treasuries and the dollar.

The “end of globalization” is a phrase that has come up a lot lately. Stories written about deglobalization have soared this year with the pandemic.

Investor sentiment is telling a mixed story about the market’s ascent since the March low; begging the question, will the skeptics converge with the optimists?

Actual third-quarter earnings may be less important than what business leaders say about their expectations.

Given current low yields, some investors wonder whether bonds can continue to provide diversification in a portfolio. Here’s why those fears may be overblown.

The potential economic and market impacts a “Blue Wave” for the U.S. election could have on five key areas: taxes, labor, the environment, oil and trade.

The transportation sector in the municipal bond market faces significant headwinds as a result of the COVID-19 pandemic.

High-yield bonds can generally offer more income in a very low-interest-rate world. However, if the economic or stock market outlook deteriorates, it could be a bumpy ride.

With investors already on edge regarding election uncertainty, an “October surprise” arrives yet again. Can history provide some guidance on how elections impact markets?

The biggest political risk facing investors may be the potential for politicians to implement national lockdowns in response to a rise in new COVID-19 cases that could lead to renewed recession and a new bear market for stocks.

When a stock index falls by more than 10%, it is often said to have entered “correction” territory. That’s a fairly neutral term for what feels like a nerve-wracking drop to many investors. What does a correction mean? What’s likely to happen after a correction, and what can you do to help your portfolio weather the downturn?

As of this writing, it’s a rough start to the week for U.S. equities. Major indices attempted to find more stable ground last week, but volatility risks persist and the bears are winning the latest round. Policy risks abound—not just election-related, but both monetary and fiscal policy as well.

Fed maintained rates at near-zero, while also updating its summary of economic projections; now expecting a shallower economic contraction, but a slower recovery thereafter.

Markets have been walking a fine line, with a still-struggling economy on one side and hopes for a COVID-19 vaccine breakthrough on the other. Heading into the fourth quarter, there are both encouraging signs and cause for caution.

The risk of a “no deal” Brexit and the potential economic harm that accompanies it increased last week.

The U.S. stock market hit pause in early September, as investors took a harder look at market overconcentration and frothy sentiment. Meanwhile, global economies may be entering a new phase, and the Federal Reserve’s newly announced inflation policy is likely to keep U.S. rates lower for longer.

The Federal Reserve has changed its inflation policy. Here’s what it may mean for markets.

Rotation away from the market’s prior momentum darlings continues. Friday’s jobs report had bullets for both the optimists’ and pessimists’ case studies. And improving productivity, partly due to work-from-home trends, could persist as a positive economic driver.

Major tech-focused shares fell after helping drive the fastest stock market recovery in history.

Prior to Hurricane Laura making landfall in Louisiana and the wildfires in California and parts of the West igniting, the U.S. had already experienced 10 different billion-dollar natural disasters this year.

Bond investors face a challenging environment. The federal funds rate is back near zero, the 10-year Treasury yield remains stuck in a 0.5%-to-0.75% range, and inflation-adjusted (real) yields are deep in negative territory.

The recent imbalances in the stock market can lead to vulnerability; rebalancing portfolios may be valuable to help balance exposure to U.S. capitalization-weighted benchmarks relative to international stocks.

The move away from a precise 2% target likely means short-term rates will stay lower for longer.

In a speedy round-trip, the S&P 500 hit an all-time high last week; meaning the rally since March is now an “official” bull market.

Treasury bond yields have been drifting quietly lower since early June. But there is more going on beneath the surface than it might seem at first glance. Real yields—nominal yields less inflation—have declined steeply into negative territory. While nominal yields are near record-low levels from the deep economic decline, inflation expectations are picking up.

Confidence matters; faith in a brighter future drives risk taking, fueling growth through investment and consumption.

Although certain high-frequency data haven’t improved markedly, the threat of the virus has started to recede.

The July labor market report had talking points for both the economic bulls and bears; with Congress on the hot seat to keep the recovery from faltering.

Treasury Inflation-Protected Securities can help protect your portfolio against rising inflation, but there are nuances you should understand.

There’s a small portion of the bond market that investors may have overlooked in the past, but should now consider—the taxable municipal bond market.

Let’s take a look at how recent developments may have impacted long-term returns for stock market investors.

The U.S. dollar has fallen by about 7% against a broad basket of currencies since its mid-March peak. After a nearly decade-long bull market that saw it appreciate by more than 40%, we believe the dollar could be headed for a longer-term decline.

The Fed left rates unchanged near-zero, as expected, while emphasizing that “the path of the economy will depend significantly on the course of the virus.”

Earnings have so far bested an extremely low bar, but stocks may be discounting too swift a recovery; while concentration remains a risk.

Investors must balance ongoing risks of the coronavirus against the extra yield the bonds provide.

If not extended or replaced, the fading support for the unemployed raises the risk of weakening economic momentum, turning the V-shaped recovery into a W.

U.S. stocks have been fairly resilient lately, even as coronavirus hotspots flare up around the country. Although consumers and businesses are increasingly worried about rolling shutdowns, major stock indexes generally have moved sideways. How long can this continue? Much depends on the shape of the economic recovery.

Rate of change and inflection points in economic data drive stocks; but in these unique times, the level of said data needs to be considered, too.

The first half of 2020 was dominated by the COVID-19 pandemic, which hit the municipal bond market hard. State and local governments experienced a sharp and sudden drop in revenue, and an increase in expenses, amid stay-at-home orders and business shutdowns.

We believe the risk that preferred-stock dividends will be suspended is low despite the recent announcement by the Federal Reserve that it is requiring banks to cap their common stock dividends.

While no one is ever really comfortable losing money, we often hear from investors that they are most uncomfortable when it seems that the stock market isn’t making any sense whether it’s heading up or down. In order to help try to make sense of it all, let’s take a look at where the stock market makes sense right now and where it doesn’t.

COVID-19 headlines dominated equity market action last week, with the S&P 500 suffering a near-3% decline; although all is not grim. The number of virus cases has been spiking in states that opened earliest—including my new home state of Florida, which went from a mid-60s average age for confirmed cases to the current mid-30s average age.

Investors should consider these various investments—cautiously. Given the challenging economic outlook and high level of uncertainty, we believe bouts of volatility are possible, albeit not to the level witnessed in February and March.

A second wave of global COVID-19 is getting a lot of media attention, but the appearance of a global second wave of cases is primarily driven by the different timing of first waves across countries—rather than second waves within countries.

As the economy reopens from COVID-19 restrictions, a question looms: What will colleges and universities look like come fall? Will students return to a more normal on-campus learning experience, some form of online experience, a combination of both … or will they simply not return?

Economies and markets whipsawed in the first half of 2020. Here’s what we expect for the rest of the year.

Returns for most fixed income asset classes are positive so far this year, but the numbers mask the rocky road markets have traveled since January.

Investors often think of municipal bonds, which are sold by local and state governments to fund public projects like building new schools and repairing city sewer systems, as being totally tax-free—but that’s not always the case.

Why did stocks rise over the past month despite grim economic news? The Federal Reserve’s massive liquidity injection is one reason.

As expected, the Federal Reserve kept rates unchanged at 0-0.25% and said it will keep them near zero through at least 2022, in a unanimous vote.

In our 2020 Global Market Outlook, we cited many indicators pointing to heightened risk of a recession; now we highlight increasing signs of a recovery from one.

The dominant question we’ve been getting from investors is about the perceived disconnect between what’s happening on Main Street and what’s happening on Wall Street.

There may be something amiss with the stock market rebound. Ahead of any meaningful improvement in economic data, global stocks have gained about 30% over the past two months from their low on March 23, as measured by the MSCI World Index.

When the COVID-19 crisis shook markets in March, the Federal Reserve moved early and aggressively to help increase liquidity in financial markets.

On a day that started with good news on an experimental COVID-19 vaccine, with the stock market showing strong early gains, today’s report is more visual and less wordy than normal. Since I know not every reader of these publications follows me on Twitter—where I’m constantly posting charts, tables and data that I find compelling...

Why did stocks rise over the past month despite grim economic news? The Federal Reserve’s massive liquidity injection is one reason.

It is becoming increasingly clear that the massive global stimulus is being financed by a rise in money, not debt.

Negative corporate news and economic data buffeted stocks, after markets racked up wins in April.

Both the bear market and subsequent rally have occurred at warp speed; yet the economic recovery may be disappointing to what the market’s now “priced in.”

The FOMC restated its commitment to use its full range of tools to support the virus-crippled economy and keep markets functioning smoothly.

A lot has happened in the month following global stocks’ low on March 23, as represented by the MSCI All Country World Index. Nearly every major country seems to have put the peak in new COVID-19 cases behind them by several weeks and the discussion has now turned to the timing and staging of re-openings.

Coronavirus-related stay-at-home orders and falling consumer demand have been extremely challenging for small businesses. If you’re a small-business owner, make sure you’re taking advantage of the help that’s available.

The effects of COVID-19 have been tough on the Energy sector, to say the least. With businesses around the global shuttered and vacations called off—and an estimated 40% of the global population ordered to stay at home—demand has fallen sharply. And that has taken both the price of oil and energy stocks down with it.

With the U.S. corporate default rate likely to rise, a growing number of investors may be wondering what they should do if their bond issuer is unable to repay its debts. Unfortunately, the answer isn’t always straightforward. There are, however, several things corporate bond investors should know.

Oil prices fell below zero on Monday for the first time in at least 155 years, dragging major stock indexes down, as well. West Texas Intermediate crude oil prices fell to -$37.63 per barrel during trading on Monday...

Stocks and earnings don’t always move in tandem; with stocks typically leading earnings … but is the market’s rally too much, too soon?

The COVID-19 pandemic has severely affected the U.S. economy, with containment efforts leading to widespread business closings and surging unemployment—and stock market volatility. The key questions now are when can the economy reopen, and what happens when it does?

Weak data revived investor concerns about the economic impact.

While the COVID-19 crisis is far from over, we expect central bank and government policies to be key to performance in the second quarter.

The most widely used measure of economic activity, gross domestic product (GDP), will soon be released for the first quarter by different countries.

Labor market data has never looked as ugly, with more hits to come; but many are looking ahead at what an eventual recovery will look like.

U.S. stocks ended lower Friday, capping a volatile week of swings both higher and lower, as investors reckoned with the increasing evidence of the COVID-19 pandemic’s economic toll.

Stocks dropped on Wednesday as investors focused on growing fears about the human and economic toll of COVID-19. The S&P 500 index lost 4.4% on Tuesday, and at the close of trading was down about 27% from its February peak.

In a typical recession, the global economy tends to have large imbalances that take a long time to unwind, such as a housing bubble or overinvestment by businesses. This time the global economy is experiencing a shock, rather than the natural end result of a slow build-up of excesses.

Schwab experts share their perspectives on how the legislation may affect individuals and markets.

We know a lot more about COVID-19 than we did a few weeks ago; but there remain questions that are unanswerable at this stage. We don’t know how much worse this gets before it starts to get better...

U.S. stocks fell again on Friday, ending another volatile week, as coronavirus fears outweighed central bank and government attempts to support the economy. The S&P 500 index fell 4.3% on Friday, and is now down 31.9% from its February peak.

As COVID-19 spread around the world in the early months of 2020, governments enacted quarantines, travel bans, school closings and other measures. Global supply chains were disrupted. Reduced demand is weighing on many industries, starting with travel, hospitality and leisure. Oil prices dropped after Saudi Arabia boosted production, in effect launching a price war with Russia. U.S. Treasury yields fell to record lows.

In a surprise move on Sunday night, the Federal Reserve cut its short-term interest rate to the 0% to 0.25% range and announced a series of moves to address the economic threat posed by the novel coronavirus. The central bank used a full range of its potential policies to support the economy and financial system.

Stocks rebounded on Friday, ending a week of wide swings that drove major U.S. stock indexes into bear-market territory. Overall, it was a rough week for the stock markets.

Stocks have plummeted this month as investors struggled to assess what impact the COVID-19 coronavirus may have on the economy.

U.S. stocks fell again on Wednesday, with the Dow Jones Industrial Average closing in bear market territory.

U.S. stocks plummeted on Monday, with the S&P 500 index closing down 7.6%, its worst day since 2008, capping two weeks of extreme volatility amid the spreading coronavirus epidemic.

In the easiest of times (are they ever, really?) it’s futile to make predictions about the market with any semblance of accuracy. Clearly, these are not the easiest of times; so the futility is magnified. Even with non-stop coverage of COVID-19; with every question answered, there’s another question to ask.

The coronavirus outbreak has affected global supply chains, consumer demand and interest rates. In response, we’re downgrading Financials and upgrading Utilities.

Despite lower prices and higher relative yields, there’s room for prices of high-yield bonds, preferred securities and bank loans to fall further.

In a surprise move, the Federal Reserve on Tuesday lowered the target range for the federal funds rate, its key benchmark interest rate, by 50 basis points,or half a percentage point, to a new range of 1% to 1.25%. The reasoning behind the move was concern about the “evolving risks” to the economy posed by the coronavirus.

Rather than trying to call the bottom, a more effective way to think about investing right now is to focus more on the duration rather than the decline. Markets may have further to fall, but they may not stay down for the rest of the year barring a severe pandemic.

What does a “correction” mean, what’s likely to happen next and what can investors do now?

How contained is the coronavirus outbreak? That’s the question that rattled markets on Monday, sending the Dow industrials down more than 1,000 points, or 3.6%. The S&P 500 index declined by 3.4%.

The impact of the coronavirus is spreading; both geographically and economically. Central banks will likely step in; but supply shocks are difficult to combat.

The coronavirus outbreak and the Democratic primary have affected sector leadership. However, we’re keeping our sector views unchanged—for now.

As a recovery in global manufacturing began to take hold in the fourth quarter of last year, commodity prices rose dramatically. Yet, emerging market (EM) stocks failed to see the similarly strong outperformance of U.S. stocks that typically accompanies rising commodity prices.

Although stocks rebounded after a sharp drop in January, the market’s reaction to the coronavirus outbreak highlighted stock vulnerabilities.

Friday’s jobs report, as well as other recent labor market data, has an “on the one hand; on the other hand” flavor to it.

While it is impossible to predict the extent a virus can spread and have greater consequences than past epidemics, history indicates that the global economy and markets have been relatively immune to the effects of past epidemics. A key reason is that global health organizations are prepared for outbreaks and effective when mobilized.

As expected, a long and strong move up in stocks attracts more and more believers and adherents, which can stretch sentiment to extremes, like now.

The U.S. economy split sharply in 2019—manufacturing activity lagged services, corporate profits lagged stock performance—while investor sentiment surged. How long will these divergences continue in 2020?

For nearly three years we’ve been tactically recommending overweighting large caps (S&P 500) and underweighting small caps (Russell 2000)—time for an update.

Next year is set to start on a high note, with consumers and the Fed keeping the economy and market afloat; but risks remain elevated, including trade and elections.

The Federal Reserve left interest rates unchanged, as expected; while signaling rates would stay in their current range through next year.

The U.S. economy likely will remain split in early 2020.

U.S. stocks continue to trade near their all-time highs but recent hiccups in trade talks have re-emphasized that a deal remains elusive, decisively unpredictable, and incomplete. Key components of the first phase have yet to be put in writing and major structural issues—such as intellectual property theft and forced technology transfers—will remain unaddressed for the foreseeable future, confirming that little-to-no material progress has been made.

While all eyes are on estimated sales throughout December, sector performance for the month is historically not impressive.

Market valuation is always a factor; but often misunderstood is the vastness of the spectrum of metrics, and the sentiment nature of valuation.

As we head into 2020, investors should be cautious in assuming that the return of central bank balance sheet growth means stocks will follow along. The real driver of the stock market in 2020 may be the outlook for growth tied to prospects for a comprehensive U.S.-China trade deal, which may revive growth in manufacturing and corporate earnings.

-U.S. stocks entered November in the process of finally breaking out of their post-January 2018 trading range. -Along with new highs has come elevated optimistic sentiment; a near-term warning sign. -Spread between the “smart money” and “dumb money” recently reached an extreme.

While volatility has remained subdued and U.S. stocks are at all-time highs, a near-term concern is that investor sentiment may be getting a bit too frothy. The potential signing of a “phase one” U.S.-China trade deal and rollback of some tariffs has contributed substantially to the rally; yet the proposals made have yet to be corroborated by anything in writing.

Although economic signals are mixed, bottom-up sector fundamentals help inform decisions on sector ratings.

Last week’s key releases of job growth and ISM manufacturing data highlight the ongoing bifurcation in the economy; with the consumer bucking manufacturing’s malaise.

As expected, the FOMC lowered the fed funds rate (and the IOER) by 25 basis points; with a slightly more hawkish tone in the accompanying statement.

While volatility has receded lately and geopolitical tensions haven’t heated up, little-to-no progress has been made on a comprehensive U.S.-China trade agreement; while the timetables for Brexit continue to shift. Although U.S. stocks are trading near their all-time highs, investor hesitation has persisted due to mixed economic data, the questionable effects of monetary policy and trade uncertainty. We continue to recommend that investors use volatility to rebalance and stay near their strategic asset allocations; maintaining our neutral stance on U.S. equities (with a bias toward large caps at the expense of small caps), and our neutral stance on both developed international and emerging market equities.

For certain sectors, a change in interest rates has a relatively large impact—and that impact has increased significantly in the “new normal” environment of low interest rates.

• Third quarter earnings season is underway, so it’s time to look under the hood.

• A wide gap between S&P 500 profits and the broader NIPA measure from the BEA supports a late-cycle view.

• The late-cycle view is also supported by weakening leading indicators.

Volatility has resurfaced due to a revival in trade tensions, heated political fighting in Washington, and confusion over whether the Fed will continue to ease or hold off on rate cuts later this month. Stocks have dropped back into a tight range and have still yet to breach their all-time highs. With the market still highly reactionary to major headlines and struggling to find its footing, we continue to recommend that investors stay near their long-term asset allocation. We also continue to recommend using volatility as a means of rebalancing; and maintaining a bias toward large-cap stocks at the expense of small caps. So long as myriad uncertainties continue to mount, we believe stocks will remain under some pressure and headway will be limited.

With a resurfacing in trade tensions and persistent economic uncertainties, investors should prepare for further volatility.

Employment reports are increasingly in focus due to weak survey data and a risk that manufacturing’s weakness spills over to services/consumer segments.

U.S. stocks plunged Wednesday, as weak economic data rattled investors. Here’s what you should know.

While U.S. stocks emerged out of their tight range a couple weeks ago, they have yet to surpass their July highs—as trade uncertainties remain, economic data continues to be mixed, and cloudy monetary policy and political outlooks persist.

It continues to be a difficult environment in which to trade around short-term news, even if short-term news is having an outsized impact on market behavior.

The Conference Board’s Leading Economic Index was flat last month; and although at a cycle high, it remains in a flattish trend over the past year.

In line with expectations, the FOMC cut rates by 25 basis points; also lowering the IOER by 30 basis points to address liquidity problems in the repo market.

Stocks have climbed higher but we don’t recommend attempting to trade around short-term moves; rather, investors should remain disciplined and diversified, and use any volatility to rebalance as needed. The consumer continues to drive the economy, while weakness is mostly still concentrated in manufacturing. Yet, the potential for volatility remains, as a comprehensive trade deal is not in sight, tariffs on consumer goods are still set to kick in on December 15, and monetary policy’s ability to spur growth and inflation may be waning. We continue to favor large caps over small caps and are neutral to U.S. and global equities.

Stocks recently broke out of their short-term range on “good” trade news; but trying to trade around trade-related news has been a treacherous exercise.

Risks to the market are growing but the American consumer continues to look strong. Some preparation for a potential storm are prudent, but no drastic actions are suggested.

It doesn’t appear that the U.S. has entered a recession yet, or even that one is imminent—although start dates to recessions typically aren’t known until we’re looking in the rear-view mirror.

Economic uncertainty has spiked given the escalating U.S.-China trade war; with increasing risk it weakens the dividing line between the manufacturing and consumer sectors.

Stock markets have become more volatile as trade tensions have worsened and weakness in the manufacturing side of the economy has caused increasing concern. Swift resolutions to these issues seem unlikely and a dovish Fed may not be the elixir to what ails the economy. With the likelihood of persistent volatility in the coming months, we recommend investors stay broadly diversified and focused on the long term. From a tactical perspective, we remain neutral to U.S. and global equities; with a bias within the U.S. market toward large cap stocks relative to small caps. Investors should not attempt to trade around short-term moves in the equity markets; but instead remain disciplined, diversified, and use rebalancing as necessary.

Current economic conditions do not look recessionary, but risks are rising and if we’re heading into one, it’s possible it already started.

Market volatility can make anyone nervous. Here’s what investors should know about dealing with it.

The manufacturing side of the economy is showing increasing signs of weakness, but the consumer still looks healthy—which side wins and what should investors do?

When the Federal Reserve lowers its key short-term interest rate, financial markets often move in response. But the impact isn’t uniform across the board.

The national debt and deficits remain at worrisome levels, spawning questions of how economic growth will be affected and whether we will hit another wall.

Stocks have been buoyed by rate cut expectations, but are investors putting too much stock in monetary policy and setting themselves up for potential disappointments?

Round number crosses for each of the three major U.S. equity averages over the past month helped elevate investor sentiment, but is it now stretched?

If you just woke from an 18-month slumber and looked at the market you might be fooled into thinking it’s gone nowhere; but what a ride it’s been.

In the first half of 2019, major stock indexes including the S&P 500^® reached new highs, yet the outlook for global economic growth softened. Recession risk has risen, and rising tariffs have created even more uncertainty.

The last 18 months have been anything but boring, but if you had ignored the market over that time and only recently started paying attention, you may think that little has happened. The running in place analogy is probably better replaced by hiking a mountain.

Myriad economic, market and policy battles are raging today; providing some color, but lots of gray area as we look ahead to the second half of the year.

We won’t speculate about the final outcome of ongoing trade tensions, but we are growing more concerned that the hit to business confidence will increasingly filter through to consumer confidence and hard economic data. A more positive outcome could elongate the runway between now and the next recession. In the meantime, we continue to recommend that investors maintain a relatively neutral stance consistent with long-term asset allocations, using inevitable gyrations to rebalance as needed.

Let’s talk what everyone’s talking about, the trade war with China and tariffs.

It doesn’t take much of a market downturn these days for investors to pull in their bullish horns; but more may be needed for market stabilization.

Trade tensions will likely continue to contribute to increase volatility and the longer it drags on, the bigger hit to economic growth, consumer/business confidence and the stock market. Our neutral stance around U.S. equities suggests keeping allocations no higher than longer-term strategic targets, with a large cap bias; using volatility for rebalancing opportunities. For those investors who don’t have broad international exposure, now may be a good time to consider areas that may feel less impact from the U.S.-China trade dispute.

Trade is back in the headlines, and on Twitter, with volatility sensitive to every tweet, tariff escalation and retaliation; but a look at the actual economic implications is in order.

Stocks dropped on Monday as the trade war between the United States and China escalated, with China announcing a retaliatory tariff hike on U.S. imports. The S&P 500 index closed down 2.41% and the Dow Jones Industrial Average lost 2.38%, their worst day in four months.

Some volatility has returned and we believe a pullback in U.S. equities is a healthy development in terms of both investor sentiment and valuations. But some cracks in economic growth may be emerging, and inflation could start to rise given the tight labor market, so investors should remain disciplined with an eye toward rebalancing in the face of volatility. Trade remains a weight on the confidence of business leaders, and if the dispute with China continues to escalate, stocks and the economy would likely suffer further.

As we move toward the finale of first quarter earnings season, results have been a bit better than expected, but barely in positive territory. The earnings beat rate has been above historical norms; while revenues have been a touch more disappointing relative to expectations. Multiples have expanded this year thanks to a strong stock market; but earnings will have to do more of the heavy lifting at some point.

U.S. equity market gains since the Christmas Eve 2018 low have been impressive, and we don’t think a recession is in the near-term future—but sentiment is extended and investors should be cautious about chasing gains at this point; either in the United States or emerging markets. A near-term pullback would likely be healthy and could afford a better opportunity for investors who are looking to add equity exposure. On the other hand, those investors whose portfolios are now holding an outsized equity allocation could use the latest strength to rebalance back toward targets.

The Leading Economic Index lifted enough in March to bring it back to a cycle high; but the deterioration in the trend bears watching.

Stocks are off to a strong start this year, but the bulls aren’t running in a herd. Bull markets can be found in the stocks of countries around the world, but their movements are less correlated with each other than they have been in the past 20 years. The change brings the return of an important diversification benefit for holders of globally diversified portfolios.

Stocks and bonds appear to be at loggerheads with regard to the economic outlook, and we believe both sides have merit. Unless earnings comfortably surprise on the upside, with healthy corporate guidance, there is a risk that stocks will give back some of their recent gains. Investor optimism remains elevated, economic data has been mixed, earnings expectations are in the red for the first quarter, and persistent trade concerns all remain potential headwinds. Stay patient and diversified and stay focused on longer-term goals.

Although Friday’s payroll report had a lot to cheer and was generally seen as Goldilocks-like, looking under the hood should generate some caution.

Brief dips in U.S. stocks have done little to dent investor confidence; and with an inverted yield curve, trade uncertainty continuing, economic growth slowing and earnings possibly declining in the first quarter, we believe a pullback is becoming increasingly likely. Investors should remain disciplined and diversified and continue to prepare for the inevitable end of this cycle—without needing to pinpoint the timing precisely.

The inversion of the 10y-3m yield curve unleashed a sharp pullback in stocks; but the Fed’s “preferred” curve first inverted in early January.

The Schwab Center for Financial Research’s theme for 2019 was “be prepared,” and that still holds true. Here’s what we expect to see for the remainder of the year.

Recession fears have risen and stocks have become more volatile, but is now the time to prepare for a sharp downturn?

I’m more intrigued with untold stories than well-told stories; which is why my contrarian side wonders whether there’s too much investor complacency about inflation.

I want to tackle a more evergreen topic, which is the implications on the economy of a high and ever-rising burden of debt. But I want to first differentiate between the deficit and debt.

The sharp rebound in equities seems to be in contrast to the deterioration in data, which could lead to near-term volatility.

Recession chatter is abundant lately. It’s increasingly the focus of Q&A sessions at investor events at which I’ve been speaking. I also received a series of questions last week about recessions from a Schwab colleague who has many younger Schwabbies on his team, most of whom have not lived as working adults through a recession.

Markets got a healthy reprieve from last year’s fourth quarter carnage as a few headwinds became tailwinds; including a more dovish Fed, some hopes on trade, strong fourth quarter earnings growth, and an end to the government shutdown.

Although 4Q18 earnings season is capping a very strong calendar year for earnings; the outlook for 2019 is decidedly murkier, with 1Q19 already in negative territory.

It’s difficult to get good footing in a market that has so many mixed messages bombarding it. We recommend patience, discipline and diversification as expect continued bouts of volatility. The U.S. government shutdown is over, for now…and the Fed is in pause mode, for now…but confidence in government is low and monetary policy is likely to persist. In the near term we believe the most important needle-mover will be the result of trade negotiations between the United States and China. The problem is the inability to gauge the likely outcome.

The Conference Board’s release of December’s Leading Economic Index was notable for its continued trend deterioration; and the second decline in three months.

Stocks have rebounded off the lows but we don’t think we’re off to the races; issues remain and investors should remain vigilant.

At a recent client event I was asked about our ongoing view that volatility would remain elevated—specifically, whether the rally off the December 2018 low in U.S. stocks was an indication that our view might be wrong.

It can be difficult to remain calm in the midst of stock market action like we’ve seen over the past couple of months—but discipline is necessary during more tumultuous times. Although we do see rising risk of a recession, we don’t see a repeat of 2008 in the cards. Absent a recession—even if we enter a “formal” bear market (at its recent closing low, the S&P was down 19.8%)—additional weakness may be somewhat limited. Recession-related bears tend to be longer and grizzlier than non-recession bears. Until we get more clarity on the health of the economy, we continue to suggest investors remain defensive.

The Fed opted to buck a broadening outcry for a pause and raised rates 25 basis points; while offering a slightly more dovish statement and lowered economic projections.

Early last week we published our collective 2019 outlook summary and today’s report will put some more visual meat on the bones of that summary.

The yield curve has appeared in quite a few news headlines recently. Why is this technical-sounding tidbit of financial jargon suddenly getting so much attention? The short answer is that the yield curve has a reputation for predicting recessions, and some market watchers are worried recent changes to the curve’s shape are sending a warning signal about the economy.

U.S. economic growth was strong in 2018, but some of the forces behind that strength were either short-term or likely to fade going forward.

The end of 2018 will likely morph into more of the same in 2019—higher volatility within a relatively wide equity range, including ongoing corrective phases or even a continuation of what has been a “stealth” bear market this year (rolling bear markets across and within asset classes). 

Stocks are applauding the truce which resulted from Presidents Trump and Xi dinner this weekend; but enthusiasm curbing over the next three months may be warranted.

When a stock index falls by more than 10%, it is often said to have entered “correction” territory. That’s a fairly neutral term for what feels like a nerve-wracking drop to many investors. What does a correction mean? What’s likely to happen after a correction, and what can you do to help your portfolio weather the downturn?

I spent last week in Asia—two days in Hong Kong, one day in Shanghai, and two days in Singapore—visiting our clients. It was a fascinating trip in some of my favorite cities in the world … well, in the case of Singapore, a city, island, and country all in one.

Volatility has ramped up but little has been resolved. Caution continues to be warranted as unresolved issues appear set to continue.

There was much to cheer in October’s jobs report, especially wage growth; but that tends to come at a “price” of tighter monetary conditions.

October has again been a scary month for investors, even though past performance does not indicate future results, history shows that stocks tend to face a seasonal tailwind heading into the end of the year. There will likely be more volatility but at least overly optimistic investor sentiment has eased, U.S. economic growth remains solid, and the midterm elections will soon be over, all of which could trigger at least a relief rally off the recent lows. But gains both here and globally are likely limited by myriad late-cycle pressures. Remain disciplined, consider diversification and rebalancing, and consider establishing a more tactically defensive positioning.

Investors often focus on the “good/bad” level of economic indicators, without regard to the stock market’s keen ability to sniff out “better/worse” inflection points.

Stock market action recently illustrates again why it’s important for investors to remain disciplined and diversified in a way consistent with their risk tolerances and investment goals. The bull market may have more legs, and upside surprises are possible, but risks have been rising over the past year or so, leading us to be more cautious and recommend that investors limit the risk in their portfolios.

Although the runway between now and the next recession remains fairly long, there are some factors signaling that we may need to start the countdown clock fairly soon.

As most people know, I spend some time in the world of the media, whether it’s on the phone with print journalists or doing financial radio, financial media on television. And more often than not, they’re three-to-five minute segments, and it’s usually about current events, what’s going on in the market and the economy.

We believe there are three positives, three negatives and three wildcards for stock market performance in the fourth quarter. We expect the balance of these factors to result in further gains for global stocks.

The Fed raised rates for the third time this year, and expects another three hikes next year; while also upping its near-term economic projections.

Liz Ann Sonders highlights two things about the so-called trade war with China that she believes don’t get the attention they deserve.

The August payroll report was generally strong, with a kick into higher gear for wages. Will “Main Street” feel better than “Wall Street” this year?

The U.S. equity bull market is intact, but recent action has not been fully-convincing, and we believe risks are rising, especially if we begin to see the same kind of frothy investor sentiment which accompanied the January highs. We continue to push the merits of tried-and-true disciplines like asset class diversification and rebalancing—the latter which forces investors to do what we all know we’re supposed to do, which is buy (or add) low and sell (or trim) high. As the old adage goes, “bulls make money, bears make money, but pigs get slaughtered.”

With the 10-year anniversary of the onset of the global financial crisis just weeks away, now is a good time to ask where the next global economic crisis might come from. To be clear: We’re not sounding any alarms here. We don’t think a crisis is imminent. But we do like to keep our eyes on the horizon.

The recent pickup in market volatility, some choppy action by U.S. stocks, and notable weakness in emerging market stocks have reinforced our belief that we may be at or near an inflection point in economic fundamentals and/or market character. We never suggest trying to time the market in the short-term, but do believe discipline around strategies like rebalancing and diversification is essential at this stage in the cycle. Risks are rising.

This report may end up being the first in an ongoing series. I think of it as a “look inside my notebook,” as it literally represents a synopsis of the recent notes I put together for our latest Asset Allocation Working Group meeting. These represent a number of budding risks for the economy with which the markets are grappling. There are offsetting positives of course, but let’s leave this report to a look at some of the possible negatives.

Stock indexes have been able to move higher as the balancing act between economic growth and investor concerns continues—but how long will it last?

The Fed acted as expected by not acting on interest rates; and although there was no associated press conference, the statement had a few nuggets of note.

The economy and earnings grabbed headlines last week; with a sharp acceleration in real GDP growth, and concerns about earnings thanks to Facebook’s face plant.

Rising trade tensions are making us a bit more cautious, although the economic and earnings fundamentals remain healthy, which could cushion some of the blow from a trade war. Stay invested, but don’t reach too far out the risk spectrum, be prepared for bouts of volatility, and remain patient, diversified and disciplined.

Job growth remains strong and the importantly-lagging unemployment rate ticked up for “good” reasons; but the skills gap remains ample.

Halfway through 2018, the S&P 500^® Index, which represents the broad U.S. stock market, had gained 2.7%—a relatively modest return that belied the drama of the first six months of the year.

The noise surrounding the stock market is getting louder, resulting in more violent moves in equities. Much of the sound and fury is best ignored by long-term investors, but there are growing risks to the bull market in the form of rising trade disputes and the possibility of a central bank mistake. For now, we believe the secular bull market is intact, but are growing more concerned and urge investors to remain disciplined and diversified.

We continue with our theme of “it’s getting late” when looking ahead to the second half; with important and rising risks to weigh against the rewards.

Despite a recent modest pullback in U.S. stocks, and a sharper one in international markets—reflecting both trade worries and the recent strength in the U.S. dollar—we don’t believe it marks the beginning of a more severe correction. Risks of a prolonged trade dispute have risen but it’s too soon to declare war; while the possibility of a positive resolution that would likely be a tailwind for equities. For now, a healthy U.S. economy is an offset to those growing worries. Threats to the current bull market have risen, and they include this being a midterm election year—which have historically been accompanied by larger-than-average maximum drawdowns. We continue to espouse discipline and diversification; but for now it’s in the context of an ongoing bull market.

I spend a lot of time on the road speaking to our investors and advisors and one of the common questions I get during the Q&A sessions is, “What keeps you up at night?” Aside from having an 18-year old daughter—and being a chronic insomniac anyway—my reply usually centers around debt and the burden it has and will continue to place on our economy.

U.S. stocks have moved toward the top of the recent range but volatility is likely to rise at times during the summer as investors deal with various global geopolitical headwinds. Further strength in the U.S. dollar would likely exacerbate the volatility—particularly within emerging markets. But limited signs of pending recession risk—at least in the United States—should keep the path of least resistance for the stock market higher. That said, patience and discipline are more important than ever in the face of sometimes ominous-sounding headlines.

The May employment report was gangbusters, with strength across most components, including payrolls, the unemployment rate and wage growth. Can it continue?

Stocks have rebounded along with economic data, could we be setting up for a solid summer?

Leading economic indicators have accelerated since morphing from recovery to expansion, so let’s see what that means for the economy and stock market looking ahead.

Liz Ann Sonders draws connections between past and present to explain the action of the stock market and how it’s connected to economic fundamentals.

A more challenging investing environment requires a more disciplined and patient investing approach. The next few months could continue to be choppy, but a U.S. and/or global recession still appears a ways off, which should keep the bull market—here and globally—intact.

Since tax reform was passed the corporate earnings jump has been extraordinary…but is the good news already priced in to stocks?

Headwinds for stocks have risen but tailwinds also exist, resulting in a more tumultuous environment. We believe there are enough positives to keep the bull market going but gains are likely to be slower in coming, volatility is likely to remain elevated and discipline to a long-term plan will be crucial. Avoid overreacting to the barrage of news and focus on the items that could change the actual fundamentals of the economy.

The yield curve has flattened significantly recently and has elicited headlines of impending doom, heightened recession risk and investor consternation…is the worry overdone?

There have been some violent market moves recently, but it’s important for investors to keep things in perspective.

Headlines have been focused on tariffs, trade and the FAANG stocks; but underneath the surface may be a more important shift toward tighter financial conditions.

The stock market environment has changed since January, making it more challenging but also creating potential opportunities.

Stocks erupted in a “tariffs tantrum” last week only to reverse course on hopes the U.S.-initiated trade spat won’t turn into a trade war.

Goldilocks reappeared last week with an extremely strong jobs report that gave stocks another reason to cheer the ninth birthday of the bull market.

Stock market volatility appears to be largely a consequence of the economic environment returning to a more “normal” status.

Every month in the immediate aftermath of the release of The Conference Board Leading Economic Index (LEI) I put together a small deck together for Schwab’s Operating Committee highlighting the overall data and some of the key takeaways.

In a record-breaking sprint from all-time highs to an “official” correction, the “short vol” trade unwinding exacerbates an initially fundamentals-driven decline.

Volatility has spiked, jolting investors out of complacency, but that doesn’t mean any dramatic action is needed.

In what was Janet Yellen’s final meeting as Fed Chair, rates were left unchanged, but the outlook for inflation was elevated in the statement.

Stocks have ripped higher to start the year and “melt-up” has become a popular descriptor; but it’s time to judge whether the flame’s too hot.

U.S. stocks may have entered a melt-up phase but for now it is relatively well supported by earnings growth; and although sentiment is extended, behavioral measures indicate still some skepticism. However, given elevated valuations, and the aforementioned overly optimistic sentiment, volatility is likely to increase and more frequent pullbacks are possible. The bull should continue to run, but likely with a bit more drama, so it’s important to stay diversified and disciplined around your long-term asset allocation.

Tax reform—or better put, tax cuts—should provide a boost to the economy, but some enthusiasm-curbing is in order regarding the details and timing.

Perhaps it’s premature (or even a jinx) to mention that if the S&P 500 ends December in the green, it will be the first time in history that U.S. stocks—as measured by that index—were up during every one of the 12 months.

Investors are cautioned not to extrapolate 2017’s performance into 2018, and we expect more frequent bouts of volatility. The global bull market is intact, supported by solid global growth and strong corporate earnings. But with the expectations bar now set quite high heading into next year, pullbacks are increasingly possible. Discipline is important looking ahead.

The U.S. stock market has bucked incessant negative news and now appears to be in melt up mode; meaning discipline is more warranted than ever.

The book is closing on third quarter earnings, which were stellar; but is it time to worry about a bar set too high in 2018?

Earnings season, both in the United States and globally, has been solid, while economic growth has accelerated across much of the globe—all supportive of an ongoing global bull market. Elevated optimism and complacency could lead to pullbacks, but we believe it would be in the context of an ongoing bull market.

My last report was on the acceleration in business capital spending (capex) that is likely to be an economic highlight in 2018. Part-and-parcel of capex is productivity—officially known as non-farm labor productivity—which has averaged less than 1% annualized growth during the current expansion.

Surprising no one, the Fed kept rates unchanged; but strongly hinted that the market’s correct about the near-certainty of a December rate hike.

Global and domestic economic growth, along with a solid earnings picture and a potential tax reform tailwind, suggest investors should remain at their target equity allocations. Pullbacks are possible but a recession doesn’t appear to be in the cards in the near term, which historically has meant the risk of a pullback turning into a bear market is low.

Since the initial surge out of the global financial crisis, capital spending has been range-bound; but there’s ample reason to expect a new upcycle.

It’s been 10 years since Charles Schwab Investment Management, Inc. first launched the Schwab Fundamental Index Funds. Fundamental Index strategies were among the first to hit the market within the strategic beta universe.

U.S. stock indices have continued to push to record highs, with little apparently able to throw them off course. The grind higher has pushed through natural disasters, the Las Vegas tragedy, domestic political failures, international political tensions, and missile tests and threats from North Korea—an ample “wall of worry” for stocks to climb.

With wage growth picking up and the labor market even tighter, it’s time to put even traditional measures of inflation back on the radar screen.

The fourth quarter is typically an active one and we don’t think this one will be any different. Solid economic growth and good corporate earnings should allow the bull market to continue but we may experience bouts of volatility and/or pullbacks. Stay diversified and disciplined around your long-term objectives.

Stocks have bucked all manner of fierce storms—figurative and literal—and optimism (and possibly risk) has risen as a result.

September has historically been a tough time for stocks and there are multiple potential pitfalls to look out for this year as well. But economic and earnings growth—both domestic and global—continues to look healthy and we expect the bull market to continue. Remain globally diversified, but also disciplined around target asset allocations; and use any volatility for rebalancing purposes.

Our hearts go out to everyone affected by Harvey and now Irma. I did little over the weekend except sit glued to the TV watching Hurricane Irma coverage. That's because I have a home in Naples, FL, on one of the southern intercoastal waterways.

Action is about to heat up as summer comes to an end but investors should remain cool. Geopolitical threats, domestic politics, and Federal Reserve actions all have the potential to add to volatility and heightens the risk of a pullback or correction. But healthy economic growth and strong corporate earnings lead us to believe that the bull market has legs.

I'm often asked how I invest my own money and often imbedded in the question is whether I prefer active or passive investing strategies. My answer is always both, and at Schwab we generally believe investors can benefit from traditional active management; e.g. mutual funds; alongside newer passive vehicles; e.g. exchange-traded funds (ETFs).

The latest bout of volatility illustrates why investors should stay focused on the longer-term. Risks for a more substantial pullback in the near-term still exist, as valuations remain elevated; but we believe solid U.S. and global economic growth, strong earnings, low inflation and still-ample global liquidity should allow the bull market to continue.

Last week, President Trump promised to unleash "fire and fury" on North Korea, which prompted its leader Kim Jong Un to see that bid and raise it to a direct threat against the U.S. territory of Guam. Collectively at Schwab (Schwab Center for Financial Research as well as our experts in Washington, DC) we believe the likelihood of military action remains low.

U.S. equity indexes continue to post record highs and the proverbial "wall of worry" appears to be losing bricks. The high expectations for earnings season have largely been bested, the U.S. economy continues to trend in a "Goldilocks" zone—not too hot, nor too cold...

Having recently upgraded our view on developed international markets (hat tip to Jeffrey Kleintop), we are now recommending investors keep their allocations to all three major equity asset classes—U.S., developed international and emerging markets—in line with strategic targets.

Much to no one's surprise, the Federal Reserve held off on raising short-term interest rates; keeping the fed funds rate in a range of 1.00-1.25%, in a unanimous vote. Although they did not say anything explicit, there were a few niblets on which to chew in the statement accompanying the meeting.

Are risks growing or will the bull market continue? We believe the answer to both is yes. Political bumbling, monetary policy shifts, and geopolitical tensions have all escalated, but the bull continues to power ahead, largely unscathed by the tumult that surrounds it.

The environment for U.S. and global stocks continues to be in decent shape, but some risks are elevated and the possibility of a pullback exists. A notable potential driver of bouts of volatility could be U.S. and global central bank policy as they sail toward monetary policy normalization.

We say goodbye to the first half of a tumultuous, but rewarding, year and look ahead to the second half to see what might be in store for the U.S. economy and stock market.

A bit of volatility returned to Wall Street, with indexes pulling back from record highs and the leading sector performer to this point in the year, technology, experiencing a decent-sized pullback. Meanwhile, we've seen a flattening of the yield curve, which suggests the bond and stock markets may be sending conflicting economic signals.

Tech "wreck?" That's a bit of a stretch in my opinion; but the financial media loves a good headline. The major ascent—and recent pullback—of the so-called FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) has generated much attention; and lately, the subject of technology stocks more broadly has dominated Q&A sessions at events at which I've spoken.

Goldilocks appears to be taking up residence on Wall Street, with modest growth, low inflation and a cautious Fed combining to make things "just right" for investors. Additionally, the apparent improving global trade trend could help contribute to further stock market gains and support large-cap outperformance. But the risk of a pullback and/or sharp acceleration in volatility is elevated courtesy of both domestic and world political uncertainty, and the potential of a Fed misstep.

The pace of job growth has slowed, but it’s likely not because the economy is weakening. It may even be because the economy is strengthening.

Both political uncertainty and Fed policy changes could contribute to increased volatility, but solid economic and earnings growth—both in the United States and globally—should help the bull market to continue. We suggest looking past the political rhetoric for the most part and focusing on economic developments and the long-term stability the United States provides. Globally, we’re seeing improving growth, but China is a concern that bears watching and emphasizes the need for a globally diversified portfolio.

"Three steps and a stumble" was first illustrated by Edson Gould, the legendary market technician from the 1930s through the 1970s. Ultimately the baton was passed from Gould to another legendary market analyst (and my mentor/boss for my first 13 years in this business), Marty Zweig, who incorporated the "rule" into his monetary policy indicator.

Subscribing to the "sell in May" theory has not always been financially rewarding, so be cautious about trying to trade around any likely volatility. The U.S. economy is growing, but not too fast, earnings have accelerated sharply, and fiscal tailwinds are still blowing. There is the potential for a retrenchment in the gains in emerging market stocks in the near term, but sticking with a diversified portfolio is important. Pullbacks are possible but stay focused on fundamentals and your long-term goals.

Much ink has been spilled lately by the financial press on the dramatic move down in market volatility as measured by the CBOE Volatility Index (VIX), to the lowest level since February 2007.

Recent market action has all the markings of a relief rally. The French vote in favor of centrist candidate Macron took "Frexit" off the table for now; a new tax cut proposal by the Trump administration, and the decreasing likelihood of a near-term U.S. government shutdown all appeared to play a part in the sharp rise in stocks and plunge in volatility.

As I've often noted when it comes to the relationship between economic data and the stock market, "better or worse tends to matter more than good or bad." In other words, stocks tend to key off rate of change more than level when it comes to economic indicators.

Investors appear to be taking another look at the risks they are willing to take, while also considering whether the reflation story may not develop as hoped. Reflation is the process of getting economic growth and price broadly back to pre-recession levels. While progress has been made, growth is still not accelerating.

Trumponomics, the Trump Trade, the Trump Rally—and more recently Trumpocalypse—you've heard them all. Now you'll read a story (and perhaps hum a tune) about economic inflection points and a stronger stock market which may have had little to do with the results of the election.

After a party is over, and the host turns on the lights, the picture often looks quite different than it did just a few minutes before. The realities of the U.S. political process are being recognized and the "hard" economic data is not yet living up to the "soft" (confidence/survey-based) data.

Much ink has been spilled by Wall Street analysts, the media, and yours truly, about the historically-wide spread between the so-called "soft" and "hard" economic data. Before getting to my latest thoughts on the subject, some definitions are in order.

Nothing seems to be able to phase the stock market recently. Political infighting, Presidential tweets, North Korean missile launches, oil falling below $50, European political uncertainty, higher bond yields, and the Fed raising rates: none of those forces have knocked stocks off their recent uptrend.

Many investors are wondering whether the stock market has come too far too fast. The latest consolidation brought the S&P 500 down only 2%, but the average stock was down more than that.

The stock market's rally resumed following the President's comments on tax reform and investor optimism continues to rise. There are solid economic supports for the market's surge, but gains may have gotten a bit ahead of themselves and a pullback should be expected at some point. As lovely as "melt-ups" feel while they're happening, a healthier pattern for stocks is to consolidate gains after significant rallies. Fundamentally, earnings have been solid, supporting the rally, but there are risks there as well as doubt about the "stickiness" of pricing power increases. Stay patient, diversified, and remember the power of rebalancing. We believe this secular bull market still has legs, but discipline is essential.

One of the key themes I and my strategy colleagues highlighted in our 2017 outlook was the regime change from monetary policy being the only game in town to fiscal policy taking at least one of the reins.

Much ink spilled these days—including by yours truly—tends to be of the macro variety. This is for good reason as studies have shown that macro forces have been greater determinants of asset class performance than traditional underlying fundamentals.

Since the Dow finally breached the 20k mark, equities have been largely range-bound. The enthusiasm seen in measures of investor sentiment following the election of Donald Trump has waned a bit as the realities of policy priorities—and getting things done in Washington—begin to set in.

In a unanimous vote, the Federal Open Market Committee (FOMC) left interest rates unchanged at its two-day meeting which concluded today; however the statement noted rising confidence among business leaders and consumer in the period since the election.

The Dow's flirtation with 20k went on for weeks, with the financial networks breathlessly reporting on every tick as it approached the milestone—subjecting them to much lighthearted ridicule on Twitter and the like.

The world is changing for investors but we believe it's largely in a positive way, although there will be bumps along the way. The recent sideways equity movement was a healthy consolidation of the post-election gains, and we suggest investors add to U.S. equity positions as needed at the expense of some developed market international exposure. Inflation is ticking higher, and the Fed is becoming more hawkish, but the conditions supporting those moves are also positive supports for stock.

U.S. stocks have been consolidating gains seen in the aftermath of the November presidential election, a healthy process following such strong gains. Further appreciation should be supported by improving U.S. and global economic and earnings growth. Disappointments are likely on the U.S. policy front but we would view those as buying opportunities for now.

In conjunction with the publishing of a summary of Schwab's 2017 outlook across asset classes; this report is a more detailed summary of my 2017 outlook, with a dash of rear-view mirror analysis of the year just ended. Each of the broad topics discussed below will be further unpacked over the next couple of months in individual reports.

The Federal Reserve surprised no one today and the vote was unanimous. The Federal Open Market Committee (FOMC) raised the federal funds rate by 25 basis points—to a range of 0.50-0.75%—for the first time this year; having raised rates initially a year ago at this same time.

November turned out to be an excellent month for the major U.S. stock indexes, with all three, plus the Russell 2000 index of small caps, hitting record highs.

The stock market has had an excited run since the presidential election, with heightened optimism for growth looking ahead into 2017. Not to rain on the optimists’ parade, but there was actually ample evidence of improving growth before the election.

Since the pre-election low on November 4, the S&P 500 is up 4.7%, while the Russell 2000 (small caps) is up a whopping 13.8%—rallies which have confounded many investors given the pre-election consensus that stocks would fall on the uncertainty associated with a Trump victory.

The election is over but some uncertainty remains, which means bouts of volatility are likely to persist. The Fed is likely to hike rates in December but uncertainty about the path of rates in 2017 will persist. Additional uncertainty may come from elections around the world, with the potential for a continuation of surprising outcomes that could rattle markets at times.

Donald Trump has pulled off an astonishing upset to win the White House, securing at least 288 electoral votes as of 3:30 a.m. EST to defeat Hillary Clinton.

Our view, expressed over the past month, was that a surprise win by Donald Trump would likely be one of the most unsettling outcomes for the markets. Indeed, that has come to fruition.

Given election-related distractions this week, today’s report will be chart-heavy and word-light; but on an important topic. Last Friday’s jobs report garnered much attention given its proximity to the next Federal Reserve meeting.

Stay calm and carry on. We believe U.S. earnings and economic growth will continue to support an ongoing bull market, but gains will likely be modest and pullbacks should be expected alongside political and monetary policy uncertainty. Globally, wage growth is picking up, but that doesn’t have to mean bad news for profits.

A burgeoning topic of conversation during Q&A sessions at my recent client events has been elevating healthcare costs and their impact on the consumer and the economy.

U.S. equity indexes have made little headway over the past few months, but flat is relatively impressive given the obstacles of Fed and election uncertainty, some softer economic data, downgrades in earnings, and valuation concerns.

Over a weekend when I thought, “there are no words…” so often, this report will have few words, but a lot of charts and tables. Speaking of the election, it’s been remarkable that, given the ample deficits of both presidential candidates, rarely do either discuss the country’s deficits or debt.