In the third quarter of 2021, we saw a bit of a pullback overall. This trend could be seen in markets at home and around the world. This followed a second quarter where we continued to see growth and expansion in the markets.
There are some key reasons this may have happened, but first, here are what the numbers showed for 2021 quarter 3:
2021 Quarter 3: Growth stalls or shrinks
September of 2021 was the worst month for the S&P 500 since March of 2020.
For the quarter, the U.S. stock market was down 0.10 percent, international developed stocks were down 0.66 percent, and global real estate was down 0.08 percent. Emerging markets were down the most at more than 8 percent. China has hit a growth recession, which has had an effect on markets around the world.
These drops haven’t been excessive, but they do signal that people are reigning in their spending.
What’s going on?
The dip in performance for markets around the world is not unexpected. There are a few factors that likely played a role.
First, spending may be down due to ongoing inflation. People might be feeling the pressure from these price increases, and pulling back instead of spending. Fortunately, inflation levels are expected to level out in the coming months. Read my post on inflation here.
Second, September is when Delta cases hit a peak in the U.S. Markets appeared to respond adversely as cases skyrocketed.
And third, investors have become wary of the market. Some investors have moved to bonds or cash to take a more conservative approach.
With those factors combined, it’s not surprising that the third quarter was weaker overall.
As we head into the fourth quarter of the year, expect much of the same. But as we kick off 2022, we might see some of those roadblocks level out, and economic activity can pick up again.
Remember, there will eventually come a tipping point with the markets. So regardless of what’s going on it’s better to continue to navigate the turmoil than it is to try to time the market.
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