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by Karl C. Mergenthaler, CFA, William Pometto, and Brad Boggia
J.P. Morgan Investment Analytics & Consulting
karl.c.mergenthaler@jpmorgan.com, william.x.pometto@jpmorgan.com, bradford.boggia@jpmchase.com
AS OF OCTOBER 2009
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U.S. EQUITY
- U.S. equity markets lost ground in October as investors showed signs of restraint and unemployment hit 10%. However, U.S. equity indices have enjoyed strong gains on a year-to-date basis.
- Small Cap Growth stocks have been strong performers with the Russell 1000 Growth Index posting a 25.39% return through October.
- Conversely, value stocks have generally under-performed relative to growth stocks during 2009.
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FIXED INCOME
- The Barclays Aggregate Index posted a smaller 0.49% return in October, and remained in positive territory for the year.
- High Yield fixed income posted favorable gains with the M.L. High Yield Index posting a 50.87% year-to-date return.
- U.S. Treasuries maintained momentum given expectations for low interest rates, soothed inflation concerns, and heavy issuances.
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INTERNATIONAL EQUITY
- International equities generated strong returns in the third quarter, with the MSCI EAFE posting a 21.04% return. This index is up 27.36% on a year-to-date basis.
- Emerging markets were the strongest performers on a year-to-date basis with the MSCI Emerging Markets Free Gross posting a 65.1% gain through October.
- Gains in emerging markets were driven by growth in consumption and stable financial performance in Latin America and Asia.
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REAL ESTATE AND OTHER
- The NAREIT Index was down 4.5% in October after three straight months of growth, but remained positive with a 11.73% year-to-date return.
- Gold prices have spiked to record levels, passing $1,000/oz. in September and continuing to climb to $1,045/oz at the end of October.
- The US Dollar continued to slide in the third quarter given concerns over growing U.S. government budget deficits and outstanding debt.
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