Stocks around the globe rallied sharply in October, helping make up for losses experienced during a volatile Q3. In the U.S., large cap stocks returned over 8%, while mid and smaller cap stocks returned 5-6%. Turning abroad, developed international and emerging market stocks were both up over 7%. On the year, both domestic and international developed stocks are back in positive territory on the year. Growth stocks again trumped value stocks, further extending their outperformance year to date. Core investment grade bonds were flat during the month, with strength in corporate credit offset by a sharp uptick in short-term interest rates.
- In its October meeting, the FOMC left the Fed Funds target rate unchanged at 0-0.25%; in its policy statement, the Fed removed language expressing concern about the global economy and stated that it would consider raising rates at its December meeting
- With 90% of companies in the S&P 500 having reported Q3 earnings, estimates are for a year over year decline of 15%; losses in energy and materials companies continue to overshadow gains in other sectors of the economy (J.P. Morgan)
- The Chinese central bank stepped up its stimulus plans by lowering interest rates and reserve requirements for banks; the measures were taken to support its '15 growth target of about 7%
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Notes: 1) Sources: Bloomberg, J.P. Morgan Asset Management, Morningstar, Hedge Fund Research, Bureau of Labor Statistics, Bureau of Economic Analysis. 2) Data as of the date of this report unless otherwise noted. 3) U.S. GDP measures the percentage change during the referenced quarter as published by BEA. 4) Consumer Price Index for All Urban Consumers: U.S. City Average, All Items Less Food and Energy is based on 12-month percent change as published by BLS. Disclosures: This material is provided for informational purposes only and does not constitute an offer or solicitation by HFS, or its subsidiaries or affiliates, to invest in these indices or their constituent products. The data contained herein are from referenced sources which HFS believes to be reliable. This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice. The views expressed are those of HFS. They are subject to change at any time. These views do not necessarily reflect the opinions of any other firm. Investing involves a high degree of risk, and all investors should carefully consider their investment objectives and the suitability of any investment. Past performance is not necessarily indicative of future results. All data is as of the date of this report unless otherwise noted.