United States

December closes out mixed quarter for U.S. and international markets


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Domestic equity indices finished higher for the quarter while international developed and emerging markets both declined. Fixed income indices ended the quarter mostly lower during the three months with the exception of U.S. high yield. Returns for the final quarter of the year were largely driven in some form or fashion by the results of the U.S. presidential election as markets continued to digest potential policy implications.

For the quarter, the S&P 500 Index rose 3.8 percent, while the Russell 2000 Index of smaller companies gained 8.8 percent. The energy, financials and basic materials sectors were the best performers, while the health care, utilities and consumer discretionary sectors lagged. Across market capitalizations, small-cap securities significantly outperformed their large- and mid-cap counterparts. Across styles, value outperformed growth across all market caps.

U.S. fixed income markets were generally negative for the quarter. Short-maturity Treasuries outperformed longer-dated issues as the yield curve steepened. Investment grade corporate securities fell as utility-, industrial-, and financial-related issuers all generated negative returns for the quarter. Lower quality, higher yielding corporate securities bucked the trend in fixed income and ended the year on a positive note. Returns in municipal bonds were negative enough to bring the return for the year into modestly negative territory.

International markets were mostly lower as the MSCI EAFE Index declined 0.7 percent. Among the largest European markets, the UK fell 0.9 percent, while Germany and France rose by 1.5 percent and 3.1 percent, respectively. Within the Pacific region, Japan declined 0.1 percent, while Australia gained 0.8 percent. In the emerging markets, the MSCI EM Index ended 4.1 percent lower.

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