Annual 2016 Market Overview

Annual 2016 Market Overview

Annual 2016 Market Overview

December 31, 2016

During 2016, the US stock market posted its best performance since 2013 after shaking off a horrific start of the year that concluded with the DJIA dropping to a two-year low of 15,660 on February 11th. The index of 30 Blue chip stocks would ultimately end the year plus 26% from that low watermark and closed the year with an annual gain of 13.42%.

Reversing course from the previous year the energy sector was the biggest gainer of the S&P 500 advancing 27.36 % during 2016 after experiencing 2 years of declines. Financial stocks
(+ 22.80%) also performed very well particularly in the latter part of the year benefiting from the prospect of less regulation coupled with a more aggressive plot of higher interest rates going forward after the Federal Reserve finally raised rates in December, for only the second time in the last 9 years.

The Russell 2000 was up 19.48% in 2016, far outpacing gains for the Dow and S&P 500, trading on the thesis that its components are more focused on the US economy, which at the moment, looks more promising than companies operating abroad.

Equity Markets 4th Quarter

The small cap Russell 2000 was the best performing equity asset class in the 4th Qtr. with a return of 8.43%. The DJIA was a close

second at 7.94%. The NASDAQ lagged with a return of just over 1.34% as the S&P Value Index clearly outperformed the S&P Growth Index by a notable 9.17% during 2016.

International Developed had a 2016 calendar year loss of (-1.88%) as well as (-1.04%) quarterly loss respectively. Facing the headwind of a stronger US $ Emerging markets continued to struggle losing (-4.56%) in the 4th quarter, but did advance 8.58% for
the year due to an early year rally.

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Third Quarter 2016 Market Review

Third Quarter 2016 Market Review

 

Capital Markets marked time and fluctuated largely sideways after posting sharp gains in the first month (July) of the 3rd Quarter.

Fixed Income
3qtr1

The 10-year US Treasury yield crept up to 1.6% after falling to 1.36% earlier in the quarter. The longer end of the curve remained less steep with the 30 Year note yielding just 2.32%. It began the quarter yielding 2.29%, so it hardly budged. Municipal bond prices moderately declined during the quarter but traded down less than -0.31%. Inflation Protected Treasuries advanced 1.42% and is now up 6.58% year to date. The US Aggregate bond advanced by .46% and ended the quarter with a 5.80% year to date gain. Comments from the Federal Open Markets Committee suggest a rate hike is in play by the end of year.  Read more

Second Quarter 2016 Market Review

Second Quarter 2016 Market Review

 Market Overview – Markets move past Brexit!

World Capital Markets quickly reversed after a knee-jerk sharp two day sell off from Friday, June 24th to Monday, June 27th in the aftermath of the UK vote to exit the European Union. However, the DJIA average recouped the two-day 871-point route ending the quarter plus 790 points in the final four trading days. Including July 1st, the US markets had their best week of the year. However, the story of the 2nd quarter and that of 2016 thus far is the action in the bond markets. The 10-year US Treasury note briefly fell below its lowest level ever at 1.385% on the first day of trading in the third quarter. The market is now firmly of the belief that Brexit collateral damage uncertainty will exert pressure on world central banks to pump even more stimulus to world economies. Brexit has put a downward trajectory on the British Pound sterling, and sparked additional demand for US Treasuries and the US dollar. Gold has caught a bid. Recent events suggest that The Federal Reserve may remain in a holding pattern as well.
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First Quarter 2016 Market Review

First Quarter 2016 Market Review

Market Overview
If an investor were to look at just the starting and ending index values for equities, it would show a quiet quarter with equities posting a very modest gain for the 1st quarter. The S&P 500 finished up 0.77% on a price only return basis. Looking deeper, however, reveals that investors were taken on a very wild ride, driven by fears of both a global and domestic recession, which saw equity markets sell off substantially and enter correction territory.
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Fourth Quarter 2015 Market Review

Fourth Quarter 2015 Market Review

Market Overview

During 2015 the US stock market posted its worst overall performance since the financial crisis of 2008. That being said, the DJIA decline of (2.23%) and the S&P 500 decline of (.73%) were modest compared to the 40% decline registered during that time. A global commodity drop led by a 30% drop in oil a year following a 50% decline in 2014 is cited as a major reason for the poor performance. The Energy sector was the biggest decliner of the S&P 500 falling (24%) during 2015. The steep drop in oil and commodity prices also spilled over into the bond markets, as energy and miner credits weakened. Much of this year’s gains were concentrated in a small number of primarily consumer discretionary individual stocks.
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Third Quarter 2015 Market Review

Third Quarter 2015 Market Review

Even with multiple positive revisions noting US economic expansion in the second quarter and pegging US 2nd quarter growth at an annual rate of 3.9%, the US stock market could not shake off the global turmoil primarily related to the reported slow-down in China. In addition, The FOMC (Federal Open Market Committee) did not increase short term interest rates despite telegraphing multiple signals that they would be raising and that left investors confused and uncertain on the actual state of the US economy. Today’s disappointing jobs report will only add to that uncertainty with a reported addition of 140,000 jobs, well below the 200,000 consensus estimate. World markets including the US were very volatile during the third quarter. The fourth quarter looks to be more of the same. Today’s Dow tape went from a decline of 260 points to up 200.
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Second Quarter 2015 Market Review

Second Quarter 2015 Market Review

Market Overview – June Gloom!

Equity markets slumped during the final 5 trading days of the quarter ending June 30th, and the US market endured its worst single day performance of 2015 on June 29th when the DJIA lost 350.33 points. Most point to the uncertainty and the media magnified headlines of Greece, China and Puerto Rico as the main culprits. To those whom have been paying attention, all this news separately would be of no surprise and almost a non-event, but when highlighted repeatedly and bolted together by the media, you have all the makings of a mini panic heading into a long holiday weekend, all the while providing undisciplined nervous participants multiple reasons to sell. The month ended in the red for both domestic and international equities, as well as all bond classes. The exception was the Russell 2000, which eked out a monthly gain of .60%. – Nothing to write home about.
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First Quarter 2015 Market Review

First Quarter 2015 Market Review

Market Overview

In 1987, U2 released a song titled “Running to Stand Still.” Although the song describes Dublin’s heroin epidemic in the 1980’s, the title could also describe the movement of the stock market through the first quarter of the year. The market has experienced heightened volatility, yet the S&P 500 finished the quarter up only 0.44%, while the Dow was -0.26%. The S&P 500 traded near an all-time high on   March 2nd, and then subsequently fell 2.5% the following week. From February 18th through March 30th, the S&P 500 failed to generate two consecutive positive trading days. This 28 day stretch is extremely rare for the market, but offers some promise. The last 6 times the market has experience a streak of 25 days or longer without back-to-back gains, the market has averaged 2.77% for the 1 month following the end of the streak.
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Fourth Quarter 2014 Market Review

Fourth Quarter 2014 Market Review

Market Overview

2014 was an extremely challenging year in managing a diversified portfolio. In the end, US equities delivered superior returns compared to most other investment opportunities. Extreme volatility returned to the capital markets during the entire 2nd half of the year, and in particular, during the fourth quarter which included minor corrections in early October and early December followed by strong relief rallies during the months of November and late December. A huge draw down in the global price of oil was the main culprit, responsible for the ensuing market volatility which was further exasperated by weak foreign currencies. An accommodative Federal Reserve also played a role in the appreciation of non-commodity assets.
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Third Quarter 2014 Market Overview

Third Quarter 2014 Market Overview

Equity Market Overview

The 3rd quarter of 2014 trended in monthly directional movements both upward and downward but at the end of the day (quarter) major US indices were little changed from that of the end of the prior quarter. A July selloff followed by a steady August rally and a mixed September left major stock indexes just slightly up from where they were at the end of the June. Year to date, the DJIA is only up 2.81% while the broader S&P has advanced by more than double that mark at 6.70%.
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