Posts tagged: global equities

In the third quarter of 2025, all three major US indices posted positive returns. The S&P 500 was up 7.79%, the
Dow Jones Industrial Average gained 5.22%, and the Nasdaq Composite jumped 11.24%.

In Equity Markets, Emerging Markets were the top performer for the second consecutive quarter. The US Market
was a close second and Developed Markets Outside the US trailed but were still positive. Bond markets in the US
and Globally posted modest positive returns during the quarter.

The Information Technology and Communication Services sectors were among the strongest performers
globally during the quarter, upholding a strong run of Artificial Intelligence driven growth for markets.

Domestically, “The One Big Beautiful Bill Act” was signed into law on July 4th, providing significant changes to
the tax code and US federal spending policy. Relating to US tariffs, trade agreements were reached with Japan
and the European Union during the quarter. On September 17th, the Federal Reserve Board acted to reduce
rates by 0.25% into a target range of 4.00-4.25% marking the first rate cut of 2025. On September 30th, Congress
failed to provide appropriations legislation for government funding and a partial US government shutdown
poses a hurdle for markets entering the final quarter of 2025.

The second quarter of 2025 showed all US major indices posting positive returns. The S&P 500 was up 10.57%,
the Dow Jones Industrial Average gained 4.98%, and the Nasdaq Composite jumped 17.75%.

In Equity Markets, Emerging Markets were the top performer for the quarter. They slightly beat out Developed
Markets outside the US and US Markets. Globally, growth outperformed value and large caps narrowly edged
out small caps.

The Federal Reserve continued to leave interest rates on hold citing uncertainty around the impact of tariffs on
prices. There is indication from the Federal Reserve Committee’s “Dot Plot” that the second half of the year may
provide some rate reprieve. The European Central Bank and Bank of England both diverged from the Fed by
cutting their target rates again.

It was a volatile start to the quarter with sharp declines following the US Administration’s announcement of
global tariffs, driving the CBOE Volatility Index (VIX) to its highest levels since 2020. Much of the uncertainty was
quickly tempered with the announcement of a 90-day tariff pause allowing markets to recover swiftly.
Geopolitical conflict between Isreal and Iran also contributed to the volatility. In the closing days of the quarter,
Legislative work by the US Senate surrounding the “One Big Beautiful Bill Act” got underway. Further work in
early Q3 will determine if the bill should succeed the “Tax Cuts & Jobs Act of 2017” which is set to expire at the
end of 2025.

The first quarter provided a lackluster start to 2025 as all US major indices posted negative returns. The S&P 500
was down -4.59%, the Dow Jones Industrial Average lost -1.28%, and the Nasdaq Composite fell -10.42%.

While US Equity markets lagged, Developed markets outside the US and Emerging markets gained in the
quarter. Value outperformed growth and large caps bested small caps during the quarter.

Interest rates generally decreased in the short- to intermediate-term segment and increased in the longer-term
segment globally for the quarter. The progression towards yield curve normalization continues, but some
short-term segments including the US, Canada, Germany and Australia remain inverted.

Domestically, a new administration took office on January 20th with planned reform in several areas that will
continue to affect markets moving forward. The Federal Open Market Committee met in mid-March leaving the
federal funds rate unchanged but indicated a stance for two rate cuts later in 2025. Much of the sluggish
performance in US markets can be attributed to the “Tariff Talk” that has dominated the news cycle. Further
clarity on the imposition of tariffs will play out in subsequent quarters this year with a broader announcement
slated for early in Q2.

The closing quarter of 2024 showed all US major indices posting positive returns. The S&P 500 was up 2.07%, the
Dow Jones Industrial Average gained a modest 0.51%, and the Nasdaq Composite boasted a 6.17% increase.

US Equity markets led the way, outperforming both Developed markets outside the US and Emerging markets.
Growth outperformed value within Developed markets globally but underperformed in Emerging markets.

In the fixed income space, yield curves showed progress towards normalization. With that said, in the UK,
Germany, Canada, and Australia, the short-term segment of the yield curve remained inverted. Realized term
premiums were generally negative across global developed markets. Shorter-term bonds generally
outperformed Longer-term bonds.

The quarter included two Federal Reserve rate cuts of 25bps in both November and December, but Fed Chair
Jerome Powell indicated a sentiment for fewer rate cuts to occur in 2025. Markets reacted to the news
negatively in the closing weeks of the quarter.

US and global elections took place during the quarter, causing a board rally in early November. The rally faded
as the quarter concluded, but 2024 in its entirety proved to be a strong year for financial markets.

The third quarter of 2024 showed all US major indices posting positive returns. The S&P 500 was up 5.53%, the
Dow Jones Industrial Average gained 8.21%, and the Nasdaq Composite increased 2.57%. The quarter included
a few market lulls, one in early August and another in early September where US major indices retreated. During
both instances, markets fully rebounded and ultimately finished the quarter strong.

Small caps outperformed large caps. Value outperformed growth within the large caps space and
underperformed within small caps. Developed markets outside the US and Emerging markets outperformed US
Equity markets.

In the fixed income space, yield curves remain inverted, but are getting closer to normalization with interest
rates generally decreasing across global developed markets in the quarter.

On September 18th, after much anticipation, the Federal Funds Rate was reduced by 50bps to a target range of
4.75-5.00%. This marks the first rate cut since March of 2020. The Fed indicated plans to continue their rate
cutting campaign through the balance of 2024 and into 2025 with a long-run goal of 3.00%.

As we look ahead to Q4, the US elections, and elections globally, the intermittent volatility seen in Q3 should
serve as a valuable reminder that sticking to a long-term investment plan is crucial.

In the second quarter of 2024 US major indices posted mixed returns. The S&P 500 finished the quarter up
3.92%, the Dow Jones Industrial Average was down -1.73%, and the Nasdaq Composite increased 8.26%. In US
markets, the technology sector showed dominance as the largest contributor to return. Large caps
outperformed small caps, and value outperformed growth in those respective segments. Developed markets
outside the US posted negative returns. Emerging markets outperformed both US and Developed markets.

Interest rates generally increased in the US Treasury market during the quarter. Short-term US treasury bonds
returned +0.77% while intermediate-term US treasury bonds returned +0.58%. Short-term corporate bonds
returned +0.96% and intermediate-term corporate bonds returned +0.74%.

The Federal Funds Rate remains a main topic of conversation for markets. General consensus now expects one
rate cut by the Fed in 2024, a number that has been reduced from five at the beginning of 2024. In global
economies, the Bank of Canada made a 0.25% cut to key interest rates on June 5th, and on June 12th the
European Central Bank followed suit.

The US Bureau of Labor Statistics reported March inflation data on April 10th showing a seasonally-adjusted
0.4% increase in the Consumer Pricing Index, bringing the 12-month rate to 3.5%. The higher than anticipated
reading caused markets to slump in the beginning of the quarter. Further reports in May and June showed a
slowing of inflation which allowed markets to rebound and capture positive returns for the first half of the year.

The first quarter of 2024 began the year with all US major indices posting positive returns. The S&P 500 finished
the quarter up 10.16%, the Dow Jones Industrial Average gained 5.62%, and the Nasdaq Composite increased
9.11%. In the US market, large caps outperformed small caps. Value outperformed growth within large caps, but
underperformed within small caps. REIT’s were the only market sector that posted negative returns. Developed
markets posted positive returns, but underperformed the US market.

Interest rates generally increased in the US Treasury market for the quarter. Short-term US treasury bonds
returned -0.05% while intermediate-term US treasury bonds returned -0.36%. Short-term corporate bonds
returned +0.60% and intermediate-term corporate bonds returned +0.26%. Short- and intermediate-term
municipal bonds returned -0.19% and -0.52%, respectively. Within the municipal fixed income market, general
obligation bonds returned -0.70% while revenue bonds returned -0.27%. Money market funds remain a good
investment option as yield curves remain inverted.

The Federal Funds Rate remained at a 5.25% to 5.50% target range throughout the first quarter, marking eight
consecutive months without change. The Fed’s dot plot, released on March 20th, showed an expectation for
three rate cuts to occur in the remainder of 2024. On March 26th, the US Census Bureau announced that
February US durable-goods new orders rebounded with a 1.4% increase on a seasonally adjusted basis. The
news follows two prior months of decline and is a positive indication for the manufacturing sector.

The Dow Jones Industrial Average and the S&P 500 closed the quarter with record highs of 39,807.37 and
5,254.35, respectively. The Nasdaq Composite hit an all-time closing high of 16,428.82 on March 22nd.
Information Technology and Communication Services sectors led market gains, but growth was not
concentrated in the “Magnificent 7” names that led the US market in 2023. Broad portfolio diversification
remains a strong strategy for investors to capture growth where it occurs.

The final quarter of the year concluded 2023 with all US major indices posting positive returns. The S&P 500 ended the quarter up 11.24%, the Dow Jones Industrial Average gained 12.48%, and the Nasdaq Composite increased 13.56%. Value underperformed growth within large caps and outperformed within small caps. Small caps outperformed large caps. REIT indices outperformed equity market indices. Developed markets outside of the US posted positive returns for the quarter and underperformed the US market.

Interest rates generally decreased in the US Treasury market for the quarter. In terms of total returns, short-term US treasury bonds returned +3.21% while intermediate-term US treasury bonds returned +3.99%. Short-term corporate bonds returned +4.12% and intermediate term corporate bonds returned +5.86%. Returns for short-and intermediate-term municipal bonds were +3.53% and +6.53%, respectively. Within the municipal fixed income market, general obligation bonds returned +7.79% while revenue bonds returned +8.15%

The Federal Funds Rate remained at a 5.25% to 5.50% range throughout the 4th quarter and the expectation set by Fed Chair Jerome Powell is for rate cuts to begin in March of 2024. The labor market has remained a bright spot in a cooling economy. Mortgage rates have come down since October and the expected cut in interest rates should revive demand in the housing market.

The Dow Jones Industrial Average set a record high on December 28, 2023 at a closing value of 37,710.10. The Nasdaq Composite and the S&P 500 also finished the year strong approaching record highs set in late 2021 and early 2022, respectively. Considering the general sentiment leading into 2023, the markets showed resilience and rewarded those who stayed diligent in a long-term investment plan.

The second half of the year started with all US major indices posting negative returns for the third quarter of
2023. The S&P 500 ended the quarter down -3.65%, the Dow Jones Industrial Average lost -2.62%, and the
Nasdaq Composite declined -4.12%. Value underperformed growth within large caps, but outperformed within
small caps. Overall, large cap companies outperformed small cap companies, and equity indices outperformed
REIT indices. Developed markets outside of the US were down as well for the quarter and underperformed both
US and emerging markets.

Interest rates increased in Q3 across all bond maturities in the US Treasury market. For the quarter,
intermediate-term US treasury bonds returned -0.81% and intermediate-term corporate bonds returned -0.96%.
The total returns for short- and intermediate-term municipal bonds were -0.94% and -2.96%, respectively.
Within the municipal fixed income market, general obligation bonds returned -4.10% while revenue bonds
returned -4.04%.

Home sales in the US have slipped to their lowest level since April 2020. The 30-year mortgage rate in the US has
climbed to 7.31% and home prices hit a new all-time high in July. This has caused home affordability to drop to
record lows. The Federal Reserve held interest rates steady in September, following a 0.25 bps increase back in
July. And they didn’t rule out another rate hike before the end of the year and expected fewer cuts next year
than previously indicated.

Although it seems that a number of negative themes hit the market during Q3, some bullish aspects are present
on the labor and inflation front. The combined power of a healthy consumer and job market is helping both the
economy and the stock market which could reflect in high consumer confidence heading into the holiday
shopping season.

The second quarter of 2023 carried the momentum from the first quarter and continued its upward climb with all major US indices posting positive gains. The S&P 500 ended the quarter up 8.30%, the Dow Jones Industrial Average gained 3.41%, and the Nasdaq Composite soared 12.81%. Growth fared well in the quarter as it outperformed value. The same can be said for large caps as they outpaced small caps during Q2. Technology stocks made significant gains, driven largely by the enthusiasm for artificial intelligence.

The U.S. Federal Reserve (Fed) kept the federal-funds rate in a range of 5.00% to 5.25% following its meeting in mid-June. The central bank warned that it may raise the federal-funds rate by another 25 basis points (0.25%) at its next meeting in July. It also left open the possibility of yet another rate hike after that. Not long ago, markets were pricing in a June 2023 peak in the federal-funds rate, followed by at least three rate cuts before the end of 2023. Now, another increase is expected and a rate cut has been pushed out to early next year. Fed Chair Jerome Powell stated that the Fed remains committed to bringing inflation back down to the goal of 2%.

U.S. employment remains strong with notable increases in job openings and robust hiring. The Department of Labor reported U.S. payrolls expanded by a greater-than-expected total of 338,000 in May. Higher mortgage rates continue to weigh on the U.S. housing market. The National Association of Realtors (NAR) reported that sales of existing homes were down 20.4% versus the same period a year earlier. From the Department of Commerce, U.S. gross domestic product (GDP) grew at a better-than-expected annualized rate of 2.0% in the first quarter of 2023. Economists have been arguing when or if economic growth, inflation, corporate profits, interest rates, and equities will peak. Both optimists and pessimists alike have been confounded by the ebb and flow of the data and the gyrations of the financial markets. Even with mixed data reported, the market continued to show its resiliency through the first half of the year.