Results for the 3rd quarter were mixed. The quarter got off to a good start as the U.S. and China agreed to continue trade negotiations and the U.S. postponed further tariff increases. This news, along with the Federal Reserve signaling an interest-rate cut, helped markets rally to new highs. However, in August, trade issues heated up again with both countries announcing new tariffs causing markets to stumble. In September, renewed hopes on trade reappeared with China waiving tariffs on some goods, while the U.S. delayed implementation of new tariffs. Again, the market rallied. Overall, large U.S. stocks managed to gain around 1.7% for the quarter, while smaller U.S. stocks lost 2.4%, and both international stocks (down 1.00%) and emerging market stocks (down 4.11%) lost ground as well.
Global economic activity continued to weaken. The U.S. economy grew more slowly in the second quarter at a 2.3% rate. Signs of further slowing in Germany and China concerned international investors. The slowing economic activity lead central banks around the world, including the Federal Reserve, to lower or consider lowering interest rates. The Federal Reserve cut interest rates twice in the quarter (0.25% both times). The yield on 10-year Treasury bonds continued to fall, ending the quarter at 1.68%. The decline in interest rates helped bonds outperform stocks, with the overall bond index up 2.27% for the quarter.
As we head into the last quarter, we remain focused on monitoring economic conditions, maintaining balance in our clients’ portfolios, and assessing potential risks. As always, please do not hesitate to reach out to us with any questions about your portfolio.
|Index||3rd Quarter 2019||Year-to-date|
|Dow Jones 30||1.83%||17.51%|
|Bloomberg Barclays U.S. Agg Bond||2.27%||8.52%|
|MSCI EAFE Index||-1.00%||13.35%|
|MSCI EM Index||-4.11%||6.23%|
Sources: Y Charts and J.P. Morgan Asset Management
Figures as of September 30, 2019. Past performance cannot guarantee future results.
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