Monthly Market Monitor - November 2012

Market Indices1NovemberYear-to-Date
S&P 500+0.58%+14.96%
Russell 3000+0.77%+15.01%
MSCI EAFE+2.43%+14.23%
MSCI Emerging Markets+1.28%+13.08%
Barclays U.S. Aggregate Bond+0.16%+4.36%
Barclays Municipal+1.65%+8.12%
Barclays US Corporate High Yield+0.80%+14.02%

Stocks, bonds and commodities all advanced in November as investors turned optimistic over improving signs of growth in the U.S and on actions taken by European leaders to keep Greece in the euro-zone. Trading was active and often times turbulent as markets wrestled with diverging reactions following President Obama's re-election and year-end federal tax and spending implications. Yet for all the bluster and serious concerns over the impending so-called "fiscal cliff" issues, stocks ended the month not far from where they began. The S&P 500 finished the month of November with a 0.6% return – including dividends. Rebounding from a near 2% loss in October, the benchmark equity index posted its fifth monthly gain over the past six months.

Small-cap stocks underperformed large-caps last month, as the Russell 2000, a proxy for small-cap equities, posted a 0.5% return. Large-cap stocks continue to outpace small-caps on a year-to-date basis as the S&P 500 returned nearly 15% compared to 12.4% for the Russell 2000. Growth stocks widely outperformed their value-oriented counterparts in November and regained their leadership for the year. The Russell 1000 Growth Index gained 1.7% last month whereas the Russell 1000 Value Index fell 0.04%. YTD, the Russell 1000 Growth Index has returned 15.3% versus 15.1% for the Russell 1000 Value Index.

In U.S. sector performance, six of the ten S&P 500 major market groups advanced in November, led by Consumer Discretionary (+3.2%), Materials (+1.7%) and Industrials (+1.7%). Utilities (-4.3%), Energy (-1.4%), Telecom (-0.9%) and Financials (-0.8%) lagged. All ten sectors continue to hold onto year-to-date gains, with Consumer Discretionary (+23.3%), Financials (+23%) and Telecom (+19.4%) the biggest YTD winners. Utilities (+1.2%) has risen the least.

Overseas developed markets widely outperformed the U.S. as the MSCI EAFE Index returned 2.4% in November. Emerging markets also outperformed the U.S. but by a lower margin, as the MSCI Emerging Markets Index returned 1.3% last month. Emerging market gains proved resilient as China's Shanghai Composite Index lost 4.3% in November, its largest decline since July. Japan's Nikkei 225 stock ended with its biggest monthly gain since February, returning 5.8% in November.

The yield on the benchmark 10-year Treasury fell ten basis points on the month, ending at 1.62%. Overall, Treasuries rose 0.5% last month, their first monthly gain since July, as measured by the Barclays US Government Bond Index. Treasuries have returned 2.4% so far this year. Returns on U.S. investment grade bonds once again barely registered positive, as the Barclays US Aggregate Bond Index returned 0.16% last month. Municipal bonds, as measured by the Barclays Municipals Index, returned 1.65% in November, extending its YTD gain to over 8.1%. Non-investment-grade corporate bonds posted a 0.8% monthly return, as measured by the Barclays US Corporate High Yield Index. High yield corporate bonds continue to be this year's top fixed-income performer.

  1. Morningstar Direct (all performance percentages are total return based, which include reinvested dividend, interest)

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