Monthly Market Monitor - July 2013 Recap

Market Indices1JulyYear-to-Date
S&P 500+5.09%+19.62%
Russell 3000+5.48%+20.31%
MSCI EAFE+5.28%+9.99%
MSCI Emerging Markets+1.10%-8.40%
Barclays US Aggregate Bond+0.14%-2.31%
Barclays Municipal-0.88% -3.54%
Barclays US Corporate High Yield+1.90%+3.34%

The S&P 500 rebounded from June losses, returning 5.1% last month, its best monthly gain since January. The Dow Jones Industrial Average and the technology-laden NASDAQ Composite returned 4.1% and 6.6% respectively. Stocks have experienced intense volatility since May when Federal Reserve Chairman Ben Bernanke first warned that the central bank would scale back its monthly asset purchase program later this year and complete it by mid-2014. The S&P 500 consequently tumbled 5.8% from a record high on May 21 through June 24. Then, after the Fed pledged to taper its stimulus program only if the economy shows sustained improvement, the index rebounded 7.2%. On July 31, Fed policy makers reiterated their pledge and held interest rates unchanged as well as the amount of their monthly bond purchases at $85 billion.

Smaller-capitalized stocks once again outperformed large-caps as the Russell 2000, a proxy for small-cap equities, surged 7% in July. Value and growth stocks were nearly tied on the month as the Russell 1000 Value Index gained 5.40% versus 5.33% for the Russell 1000 Growth Index. On a year-to-date (YTD) basis however, value has outperformed growth as the Russell 1000 Value Index advanced 22.2% versus 17.7% for the Russell 1000 Growth Index. Commodities, as measured by the S&P GSCI Index, gained 4.9% last month, trimming its YTD loss to 0.8%. Gold futures climbed by 7.3% last month, its biggest gain since January 2012, trimming its YTD loss to 21.7%. West Texas Intermediate (WTI) crude oil futures rose 8.8% in July for its largest monthly gain since last August.

All ten major sector groups within the S&P 500 advanced in July. Healthcare (+7.3%), Industrials (+5.7%) and Materials (+5.7%) led the rally, while Consumer Staples (+4.1%) and Telecom (+0.2%) gained the least. For the year, nine of the ten S&P sectors have posted double-digit gains, led by Healthcare (+29%), Consumer Discretionary (+26%) and Financials (+26%). Materials gained the least so far this year, up just 8.7%.

Overseas developed markets slightly outperformed the U.S. in July as the MSCI EAFE Index returned 5.3% last month. Japan's unprecedented stimulus policies have pushed the nation's Nikkei equity index to become the best performer among the world's major markets, up 32.6% so far this year. Emerging markets, as measured by the MSCI Emerging Markets Index, rose 1.1% in July after falling 6.3% in June.

Treasuries, as measured by the Barclays U.S. Government Bond Index, retreated fractionally on the month (-0.1%), extending its YTD loss to 2.1%. The yield on 10-year U.S. Treasury notes increased by nine basis points in July to end the month at 2.58%. U.S. investment grade bonds, as measured by the Barclays U.S. Aggregate Bond Index, rose 0.1% last month, its first gain since April. Municipal bonds, as measured by the Barclays Municipals Index, fell 0.9% in July, extending its YTD loss to 3.5%. The Barclays U.S. Corporate High Yield Index, a proxy for non-investment grade corporate bonds, returned 1.9% in July, boosting its YTD gain to 3.5%.

  1. Morningstar Direct (all performance percentages are total return based, which include reinvested dividend, interest)

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