U.S. equity markets declined in October. The S&P 500 declined 1.82% for the month, while small cap stocks, as measured by the Russell 2000, declined by 4.75%. Value stocks outpaced growth stocks, though both were negative. Developed international stocks declined 1.70%, but emerging market stocks continued their recent leadership with a 0.25% return that outpaced U.S and developed international markets.
Fixed income markets were challenging in October as rates increased, particularly at the longer end of the curve. The yield on the benchmark 10-year Treasury increased from 1.60% to 1.84% during the month. The Barclays Aggregate Bond Index declined by 0.76% for the month as Treasuries declined 1.10% and Barclays Investment Grade Bond Index declined by 0.81%. The Barclays High Yield Index bucked the trend and posted a 0.39% increase for October.
Major U.S. equity indices declined in October, despite earnings for the S&P 500 apparently ending a five quarter slump. Value stocks outperformed growth stocks and large caps beat small caps. Developed international equities recorded negative returns while emerging market stocks managed to post a slight positive return.
FIXED INCOME MARKETS
The yield curve steepened again in October, with short term rates remaining flat and longer term rates increasing. In a repeat of last month’s result, Treasuries and investment grade corporates declined in value while high yield managed to post a modest positive return.
As expected, the advance estimate of third quarter GDP strengthened from the weak growth displayed during the first half of the year. Net exports contributed 0.83% to the 2.9% growth (best level since third quarter 2014) exhibited by the U.S. economy, and inventory restocking contributed 0.61%. Job creation disappointed in September (data released in October) for the second consecutive month. Home sales and building permits improved from the prior month and the ISM surveys measuring the manufacturing and service sectors both rebounded and were above the 50 level that denotes continued expansion. Presidential election news continues to dominate the airwaves and is fueling uncertainty in the markets.
|Univ. of Mich. Sentiment||Oct (F)||88.2||87.2||87.9|
|Retail Sales ex Auto & Gas||Sep||0.30%||0.30%||-0.10%||0.00%|
|PPI MOM ex Food & Energy||Sep||0.10%||0.30%||0.30%|
|PPI YOY ex Food & Energy||Sep||1.20%||1.20%||1.00%|
|CPI MOM ex Food & Energy||Sep||0.20%||0.10%||0.30%|
|CPI YOY ex Food & Energy||Sep||2.30%||2.20%||2.30%|
|New Home Sales||Sep||600,000||593,000||609,000||575,000|
|Existing Home Sales||Sep||5,350,000||5,470,000||5,330,000||5,300,000|
|Durable Goods Orders||Sep (P)||0.00%||-0.10%||0.10%||0.30%|
|S&P CoreLogic CS 20-City YOY||Aug||5.00%||5.13%||5.02%||4.98%|
|GDP Annualized QOQ||3Q (A)||2.60%||2.90%||1.40%|
Click here for a PDF of Glenn Dorsey’s Monthly Recap
Past performance is not indicative of future results. This is not financial advice or an offer to sell any product. Clark Capital Management Group, Inc. reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. It should not be assumed that any of the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein. Clark Capital Management Group, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Clark Capital’s advisory services can be found in its Form ADV which is available upon request.