By: Matt Garrott

The S&P 500 gained 4.8% in May, offsetting the 4.2% dip in April.  Year-to-date the S&P 500 is up over 11% while the Bloomberg US Aggregate Bond Index continues to struggle, down about 1%.

The Dow Jones Industrial Average made history on May 17th, closing at over 40,000 for the first time.  The index soared 2,300 points on its way through 40,000, but has since plummeted 1,400 points from the peak.  The numbers are dramatic, but it’s important to put them in perspective.  Another way to describe this year so far is that the Dow rose 6% to start (still very good!) then pulled back about 3.5%.    It is up about 2.5% year to date now.

When the Dow hits a milestone like 40,000, it’s good to reframe what “points” mean.  Coming out of the financial crisis in 2009, the Dow was at 10,000 and a 100 point move in one day was 1%, a relatively big move.  Today that same 100 points is 0.25% and a 1% move is 400 points.  The Dow bounced around that 10,000 range for about a decade prior to breaking out post-crisis so many market-watchers are anchored to that level.  As a result, 100 points can still feel like a big deal even though it represents a smaller percentage move today.