Market Comments: As of January 2014
After strong performance last year, January of 2014 ended the month in negative territory across the board, with the S&P 500 losing 3.46% and the Dow off 5.19%. Foreign markets fared no better. International developed stocks and those from emerging markets were down 4.03% and 6.49%, respectively. The continuation of Fed tapering (now $65 billion in bond purchases a month), fears of deflation coming from Europe, and turmoil in emerging markets all contributed to the market’s weakness. Also, the market may simply be due for a pull back after an outstanding move upwards the previous year. Amidst the recent sell off, economic data still looks positive. U.S. GDP came in at 3.2% annual growth, led by a pick-up in domestic demand, the unemployment rate continues to tick downwards, and manufacturing activity around the globe remains in expansion mode. Fixed income rallied as the 10-year treasury yield dropped into the 2.6% range, and municipal bond funds saw money come back in after large outflows in 2013.