Commentary & Resources
Market Commentary - May 2013
April was a record-setting month with the S&P 500 finishing the month at 1,597, a new all-time historical high. While returns slowed from March’s 3.8% advance, the benchmark equity index rose a sixth straight month, its longest winning streak since September 2009. The Dow Jones Industrial Average rose for a fifth consecutive month and matched the performance of the S&P 500. The Dow reached a new all-time high of 14,865 on April 11th. The technology-focused NASDAQ Composite also finished with a 1.9% gain last month, closing at a 12-year high. Overall, investors tread a little more cautiously on recent signs of global slowing, while sentiment remains backstopped by improving corporate earnings and free-flowing central bank stimulus.
Small-cap stocks underperformed large-caps as the Russell 2000, a proxy for small-cap equities, fell 0.4% in April. Growth stocks outperformed their value counterparts as the Russell 1000 Growth Index gained 2.1% last month whereas the Russell 1000 Value Index returned 1.5%. On a year-to-date basis however, value outperformed growth by over 2% as the Russell 1000 Value Index returned 14% versus 11.9% for the Russell 1000 Growth Index. Commodities, as measured by the S&P GSCI Index, fell 4.7% in April following a 0.8% March gain. Gold futures recovered 4.2% during the last week of April, trimming their biggest monthly loss in over a year to 7.7%. Crude oil futures lost 3.9% last month as strong domestic production lifted the nation’s stockpiles to a 22-year high.
Eight of the ten S&P 500 sector groups advanced in April, led by Telecom (+7%), Utilities (+6%) and Consumer Staples (+3.1%). Energy (-0.9%) and Industrials (-0.8%) were April’s laggards. For the year, all ten S&P sectors continued to register gains, with six of the ten major sectors advancing double-digit percentage figures. Utilities (+19.7%), Healthcare (+19.2%) and Consumer Staples (+18.1%), all defensive-oriented sectors, are this year’s biggest winners. Materials (+5.5%) and Technology (+5.5%) have returned the least on a year-to-date basis.
Overseas developed markets widely outperformed the U.S. as the MSCI EAFE Index returned 5.3% in April. The strong advance came courtesy of massive stimulus measures from the Bank of Japan, sending Japan’s Nikkei index up 12.4% in April. Emerging markets ended the month on a high note, as the MSCI Emerging Markets Index advanced 1.2% on April 30th, capping the month with a 0.8% gain. The emerging markets index is down 0.8% year-to-date.
U.S. Treasury 10-year note yields finished April at the lowest month-end level this year, ending at 1.67%, down 20 basis points from the end of March. Treasuries, as measured by the Barclays U.S. Government Bond Index, returning 0.8% in April, its third monthly gain. U.S. investment grade bonds of all types gained the most since July, up 1% last month, as measured by the Barclays U.S. Aggregate Bond Index. Municipal bonds, as measured by the Barclays Municipals Index, rose 1.1% in April. Non-investment grade corporate bonds posted a 1.8% monthly return, as measured by the Barclays U.S. Corporate High Yield Index.
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