3rd Quarter Update
The 3rd quarter ended in positive territory for most of the major indices. The Russell 2000 value (small cap value), Dow Jones US Select Divided Index, the Russell Mid Cap Value, and the Russell 1000 value indices enjoyed the greatest growth during the month of September. The common theme for September has been a rotation of dollars from growth oriented stocks to value stocks. We believe that rotation will continue in the quarter to come as investors search for equity income as a result of the drop in bond yields. For the quarter, the Dow Jones Industrial Average Select Dividend Index and the S&P 500 Dividend Aristocrat index shared top performance honors. Among the most well know indices, the DJIA posted a gain of 1.83% performance for the quarter (total return, inclusive of dividends), the S&P was up 1.77% (total return, inclusive of dividends) and the NASDAQ fell 0.35% flat.
Regarding the capital markets overall, the quarter noted significant reduction in interest rates to the point that the two year and ten year treasuries are offering virtually the same yield. The three month T-bill market has had higher yields than the two, five and ten year treasuries for an extended period of time making money market funds a more attractive investment than most taxable bonds and CDs. The stock markets, during the quarter, were trading in a very tight range and continue to trade near their all-time highs. We believe that with so many uncertainties around the globe, the markets will likely continue to be volatile with the end result being mostly a sideways move.
Trade, tariffs, interest rate movements, global unrest particularly in the Mideast and Hong Kong, political upheaval in the US and Britain will cause investors to pause until some of the uncertainties have been resolved one way or another. The Fed continues to become more accommodative by lowering interest rates and by suggesting more quantitative easing might be a prudent strategy. Bottom line, should trade deals move forward, political unrest calms and interest rates continue in a downward direction, it is likely that the markets may go higher. However, should tensions heat up on trade, politics, the Middle East and less accommodation from the Fed, you could expect that the markets may likely sell off. Please call or email us with any questions you may have.
Opinions expressed are those of the author and not necessarily those of Raymond James. Information provided is general in nature, and is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security. Past performance is not indicative of future results. There is no assurance these trends will continue or that forecasts mentioned will occur. Investing always involves risk and you may incur a profit or loss. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The Russell 2000 is an unmanaged index of small cap securities. The Russell Midcap Value Index ® measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values. The stocks are also members of the Russell 1000 Value index. The Russell 1000 Index® measures the performance of the 1,000 largest companies in the Russell 3000.The Dow Jones U.S. Select Dividend Index aims to represent the U.S.’s leading stocks by dividend yield. The S&P 500 Dividend Aristocrats Index is a list of companies in the S&P 500 with a track record of increasing dividends for at least 25 consecutive years. It tracks the performance of well-known, mainly large-cap, blue-chip companies.
