What a difference a month can make
MONTHLY MARKET COMMENTARY |
After a mostly negative September and third quarter, October brought a great start to the fourth quarter in most asset classes. Overall, the selling pressure seen over the late summer was reversed not only domestically but also internationally. Domestically, large cap stocks as represented by the Russell 1000 outperformed the small cap stocks of the Russell 2000 during October. Large cap stocks also moved into positive territory for year-to-date returns while small cap stocks are still negative. Growth stocks continued to outperform value-oriented stocks during the month and on a year-to-date basis. Large cap stocks outperformed small internationally as well during October; however, international small cap stocks have returned almost 8.8 percent through the first 10 months of the year. Emerging market stocks had a great month though the YTD returns are still down almost 10 percent. In the fixed income markets, the Barclays U.S. Aggregate Index eked out a 0.02 percent return for the month with lower quality and longer maturity bonds outperforming higher quality and shorter maturity peers.
Overall, the yield on 10-year U.S. Treasuries rose slightly from 2.06 percent to 2.15 percent, highlighting improved investor sentiment that aligns with the rise in equity markets. However, global growth is still an issue and the strong dollar is hurting revenue of large, domestic multinational companies.
One set of factors behind the positive upswing in markets during October was the likelihood seen earlier in the month that the Federal Reserve wasn’t going to raise rates during their October meeting, combined with the additional stimulus expected from the European Central Bank and the Peoples Bank of China.