Market Comments: As of October 2014
Increased market volatility from September continued into October, but most equity markets ended up with gains despite the mid-month pullback. The large cap S&P 500 and DJ Industrial Average returned 2.44% and 2.16%, respectively. Not to be outdone, the Russell 2000 small cap index rebounded for an impressive 6.59% gain. Outside the United States, equity performance has not been as robust. The MSCI EAFE lost 1.45% for the month and the MSCI Emerging Markets was up only 1.18%. Central bank actions proceeded as anticipated in one instance, but surprised in another. The Federal Reserve ended its quantitative easing program, citing increasing strength in the domestic economy, but remains committed to holding key interest rates at low levels for a “considerable period” of time. The Bank of Japan unexpectedly increased its own monetary easing program by a significant amount, sparking an immediate weakening of the Yen and an uptick in Japanese stock prices. The European Central Bank is now facing mounting pressure to expand its own stimulus efforts in order to revive growth in the Euro region. While signs of durable economic activity are lacking overseas, the United States has proved resilient, registering 3.5% GDP growth in the 3rd quarter.