- U.S. equities ended Q2 with strength, with the S&P 500® posting a gain of 9%, despite inflation concerns and uncertainty over the future course of the Fed’s stimulus efforts. In a reversal from Q1, mid- and small-caps underperformed, with the S&P MidCap 400® and S&P SmallCap 600® up 4% and 5%, respectively. Volatility declined, with the VIX closing at 15.83.
- All factors posted gains, with Momentum in the lead, after its disappointing performance in Q1. In another reversal, Growth outpaced Value.
- All sectors except Utilities posted gains, with Real Estate in the lead, up 13%.
- A major reversal in the U.S. markets occurred in November, thanks to promising developments on COVID-19 vaccines along with a putatively benign outcome of the Presidential and Congressional elections. The S&P 500® gained 11%, its best performance since April, while smaller caps outperformed, with the S&P MidCap 400® and the S&P SmallCap 600® rising 14% and 18%, respectively. Volatility declined, as VIX® closed the month at 20.57.
- All factor indices gained, as High Beta and Enhanced Value strategies topped the factor league table. Consistent with the reversal theme, Equal Weight outperformed, while Value outperformed Growth.
- Not surprisingly, sector dispersion widened in November, as history shows that sectors tend to be especially important during the Novembers when Presidential elections take place. Energy, up a remarkable 28%, was the month’s top performing sector after years of underperformance.
This report features world capital market performance and a timeline of events for the past quarter. It begins with a global overview, then features the returns of stock and bond asset classes in the US and international markets.
The report also illustrates the impact of globally diversified portfolios and features a quarterly topic.
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It’s natural for investors to seek a connection between who wins the White House and which way stocks will go. But a look at history underscores that shareholders are investing in companies, not a political party.What History Tells Us About US Presidential Elections and the Market
- In spite of weak macroeconomic data and fears of a resurgence of COVID-19, U.S. equities continued their rally in July, aided by Fed stimulus and strong earnings results The S&P 500® gained by 6%, while the S&P MidCap 400® and the S&P SmallCap 600® gained by 5% and 4%, respectively. The total return for the S&P 500 is now modestly positive year to date. Volatility declined, with the VIX® closing the month at 24.46.
- International markets also gained, with especially strong performance in the emerging markets. The S&P Developed Ex-U.S. BMI and S&P Emerging BMI were up 3% and 8%, respectively.
- With the exception of Enhanced Value, all factor indices posted gains, with Momentum and Low Volatility in the lead. Consumer Discretionary and Utilities were the top performing sectors.
- After March’s carnage, U.S. equities roared back in April, driven by fiscal stimulus and the apparent slowing of the spread of COVID-19. The S&P 500® gained by 13%, the best monthly performance since January 1987. In a reversal from the recent past, mid-caps performed even better, with the S&P MidCap 400® up 14%. While still relatively high, volatility calmed, with the VIX® closing the month at 34.15.
- International markets also recovered, with the S&P Developed Ex-U.S. BMI and S&P Emerging BMI up 8% and 10%, respectively.
- All factors and sectors posted gains, with High Beta and Growth in the lead, followed by Equal Weight, thanks to the recovery of smaller-caps. After suffering this year and in spite of the volatility of oil prices, Energy made a comeback as the top performing sector.