Reflecting on the market

Woman reflecting on changes in the market in 2016.

Staying on top of your investments and the market doesn’t just make you smart. It also helps you make informed decisions about your plan for retirement. We pulled together 2016 events that helped shape the world of investments. Spend a few minutes looking back, then determine what future you want and the steps you need to take to get there.


Worst start ever: The S&P 500 recorded its worst two-week opening in history after the Fed raised interest rates in December 2015.1 Even with the hike, interest rates around the world remained historically low.


Making a comeback: The Dow reached its lowest point in the middle of the month after falling oil prices, a slowdown in China and losses in stocks.2 But it quickly turned around for the biggest quarterly comeback in 83 years.3


Getting through Brexit: After an uphill climb following a slow start, the S&P 500 took a dip due to Brexit-induced uncertainty. Luckily, the market got back on track, and even reached an all-time high by the end of the year.4


Election of Donald Trump: A whirlwind campaign season ended with the election of billionaire real estate developer and reality T.V. star Donald Trump. We expected market volatility, but the markets surprised us with a positive reaction. It goes to show that a long-term strategy and removing emotion can be important to investing.4

Decade-low unemployment: The 4.6 percent unemployment rate was the lowest we’ve seen in nearly 10 years. But while some rejoiced, others were skeptical due to the ongoing debate over who’s actually included in the labor force. Regardless, the rate is a huge improvement compared to the rate after the financial crisis.5


All-time marketing high: There was evidence of a rapid stock market fall on election night; however, the S&P 500, NASDAQ and Dow Jones reached all-time highs in December. Keep watching to see where markets trend in 2017.

Fed raises key interest rate .25%: On December 14, the Fed announced it had increased the Federal Funds Rate from .5 percent to .75 percent while also indicating that more interest rate increases are expected in 2017.6

Low but rising Treasury yields: With the prospect of an increased fiscal stimulus and the likelihood of rising inflation, U.S. Treasury yields went up during the last two months of the year. However, a 30-year Treasury bond still has a yield about equal to the core inflation rate.7

Looking forward

Like most years, the market had plenty of ups and downs in 2016. But a long-term focus and diversified portfolio may help you ride them out.

We’ll continue to keep an eye on the market in 2017 while you stay focused on your long-term goals.

Financial education

Your financial goals are unique and so is your path to get there. In less than 30 minutes, you can learn more about a financial topic that matters to you.

Have an account with Principal®?

Access it online to see investments, coverage, and more.

1 U.S. stocks post worst 10-day start to a year in history, Market Watch, Jan. 2016.

2 Dow closes at 2-year low, dogged by global market turmoil, Market Watch, Feb. 2016.

3 Dow posts biggest quarterly comeback since 1933, CNBC, Mar. 2016.

4 S&P 500 historical data from Jan. 2016 to Dec. 2016.

5 Unemployment drops to 4.6%, lowest since 2007, CNN Money, Dec. 2016.

6 What The Federal Reserve interest rate hike really means for your money, Forbes, Dec. 2016.  

7 Daily Treasury Yields Curve Rates, U.S. Department of the Treasury, 2016.

This information is intended to be educational in nature and is not intended to be taken as a recommendation.

Asset allocation and diversification do not ensure a profit or protect against a loss.

Investing involves risk, including possible loss of principal.

Equity investment options involve greater risk, including heightened volatility, than fixed-income investment options.

Past performance does not guarantee future results

Instances of high double-digit returns were achieved primarily during favorable market conditions and may not be sustainable over time.