Shares of the largest U.S. companies continued their outperformance of foreign developed markets during the 3rd quarter. Over the past 12 months, their return also trounced both those of smaller U.S. companies (+4.3% vs. -8.9%) by a surprisingly wide margin.
Congratulations to the USA Women's National Team, which won the 2019 FIFA Women's World Cup earlier this month by beating the Netherlands 2 - 0. (...) As on the field, though, the US keeps mounting victories in terms of stock market performance, too, against the rest of the world.
After a dismal end to 2018, stock and bond markets rebounded in Q1, with the S&P 500 delivering its best quarter (+13.6% including dividends) since the financial crisis 10 years ago. Some factors positively influencing investor sentiment included: an end to the U.S. government shutdown, improving prospects for a U.S-China trade agreement, and a shift to more accommodative monetary policy from the U.S. Federal Reserve. Every global asset class represented in our clients’ portfolios appreciated in Q1, and most equity indexes notched double-digit returns (...)
Global equity markets suffered significant losses during the 4th quarter, which dragged down stock returns across the board for the full year. Our clients’ portfolios, most of which include an allocation to bonds, declined somewhat less. Still, 2018 was unusual in that almost every major investment category experienced a negative total return. The exceptions were cash, US Fixed Income, and TIPs (note: your portfolio’s allocation and results may differ—please refer to your Quarterly Portfolio Review Report).
This year is so different from last. In 2017, US stocks marched upward each and every month. International stocks delivered even higher returns, making up partially for some years of underperformance. While short-term interest rates were pushed upward by policy makers, longer-term rates were very steady, leading to good bond returns, too.
Domestic stocks rebounded in the second quarter–led by small cap, energy, and technology shares—but the broader S&P 500 index still ended the quarter below its January peak (up less than 3% for the year). Investor sentiment during the first half was mixed. Initially, optimism abounded that the stimulative impact of last December’s tax cuts, combined with the longest monthly job expansion on record, would push stocks higher. Subsequently, rising geopolitical tensions and escalating trade disputes have clouded the picture, and increased the potential for negative unintended consequences.