2017 Second Quarter Investment Commentary

Written by John Cox, CFA, CAIA on July 5, 2017

While the first half of 2017 has been dominated by mostly negative political headlines,
the global markets appear to be more focused on improving economies around the world,
building stronger corporate earnings and increasing the potential for pro-business policies
to be implemented in the United States.

Equity markets have done well so far in 2017, with Emerging Markets being the strongest
performer year-to-date, followed by Europe and the United States. Earnings growth has been
strong across the board, and the forward-looking returns for equities may be dependent
on earnings sustainability. For the second quarter, the proxy for U.S. large company stocks
(S&P 500) was up 3.09%, while the Russell Mid-Cap index returned 2.70%, and the Russell
Small Cap index gained 2.46%. International stocks in the developed markets of Europe
and Japan, as measured by the MSCI EAFE index, rose 6.12%, and the MSCI Emerging
Market benchmark did slightly better, gaining 6.27%.

In the U.S., growth sectors (consumer, healthcare, technology, etc.) significantly outperformed value sectors (energy, financials, telecom, etc.). In fact, just a handful of stocks like Amazon, Facebook and Google have been responsible for most of the market’s 2017 return.

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