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%