Since the S&P 400, the S&P 600 and the Russell 2000 indexes all hit record highs on October 1, the first day of the shutdown, the stock markets have been sliding, though because these seem to be politically generated losses versus fundamental problems in the markets or economy, I’m completely sanguine. We’ve seen this movie before. And the credits will begin to roll when cooler and wiser heads decide it’s time to free the country from this hostage situation and get on with the job of governing rather than arguing.
Tuesday’s ISM manufacturing report was stronger than expected and continued the trend of strong economic reports confounding those who think the economy is going into a hole. And while today’s service economy report was less robust, we are still well in expansion mode rather than neutral or, heaven forbid, in contraction.
While we still got an unemployment claims report yesterday, which looked good, the more important and more eagerly awaited Friday payroll report we should have gotten today has been delayed by the budget wrangling, and hence, we don’t know precisely if unemployment continues to fall or is in a stall.
I don’t know if you’ve noticed, but health care stocks have done extremely well this year, and have also done well in the first three days of this month, despite all the negative sentiment that seemed to greet the arrival of Obamacare (countered, of course, by a large number of people who eagerly jumped to apply for insurance through the Affordable Care Act). I guess it depends what side you’re on, but the fact is that in the first two days of this month, Vanguard Health Care Fund (VGHCX) and Vanguard Health Care ETF (VHT) were both up 0.3%, compared to a 0.1% loss in Vanguard Total Stock Market Fund (VTSMX).
Yes, I know those two days of gains don’t mean a whole lot, so let me also tell you what’s happened so far this year. Vanguard Health Care Fund, under Jean Hynes’ leadership, is up 29.7% YTD, a full 8.6 percentage points ahead of Total Stock Market. Health Care ETF is 0.7 percentage points ahead of the active fund.
Senior Editor Dan Wiener and Editor/Research Director Jeffrey DeMaso publish The Independent Adviser for Vanguard Investors, a monthly newsletter that keeps abreast of recent developments at Vanguard, and the annual FFSA Independent Guide to the Vanguard Funds.