Bull or a bear, there was something for everyone in the first quarter. Stocks continued to recover, and bond yields fell. Here’s our perspective on the latest market moves.
October lived up to its billing as the “worst month,” with the global MSCI All-Country World Index falling 7.5%, leaving the index down 4% for the year. US stocks, which had held up amid weakness abroad, fell 6.8% in October. Bonds, which usually zig when stocks zag, also saw selling pressure as interest rates rose.
The sharp 10% correction in stocks earlier in the year seems like a distant memory. Domestic equity markets regained new highs in the third quarter as the ongoing narratives surrounding shaky emerging markets, never-ending Brexit negotiations, rising interest rates, and trade tensions failed to dent confidence.
The S&P 500 returned 3.7% while the broader MSCI All-World index gained 3.0% in July, recording the strongest gains for stock markets since January and putting the S&P within 50 points of its all-time highs. Monetary policy changes are underway and, for now at least, the economy and the markets are relatively undisturbed.
Choppy markets continued in April. After all the large swings, the S&P 500 ended with a modest gain of 0.4% for the month, leaving the index down 0.4% for the year. Developed international markets beat domestic stocks with the MSCI EAFE index gaining 2.4% in April. Emerging market equities, feeling currency pressure and geopolitical tensions, pulled back in April but show small gains for the year.
In January, enthusiasm for economic growth and pending US tax cuts lifted the S&P 500 5.7%. February brought talk of trade wars, higher interest rates, and the return of volatility as major stock indexes declined 10% from highs before ending the month with a 3.7% loss on the S&P 500.