4th Quarter 2015 Markets in Review
Posted by Matthew Wolniewicz, Chief Revenue Officer at fi360 on January 21, 2016
Domestic equities struggled in December, but due to solid gains during the rest of the fourth- quarter, the year finished essentially flat. Stocks outperformed bonds for the fourth consecutive year, the S&P Composite climbed to an all-time high in May, and several sectors were buoyed by merger and acquisition activity. According to data from Dealogic, 2015 was the biggest year for global M&A with over $5 trillion in transactions and $2.5 trillion in the US. Large-cap benchmarks outperformed small-cap benchmarks for the year and growth outperformed value. The 50 largest stocks at the beginning of 2015 were up an average of 1.5% by year-end, while the 50 smallest stocks were down 11.9%. However, worries about global economic growth, China, interest rates, commodities and the energy sector were a drag. Consumer discretionary was the best performing sector for the year up 10.1%, while energy was the worst performing sector down 21.1% as oil prices ended the year at an 11 year low, and commodities had their fifth consecutive year of negative price returns.
|
|
Total Returns |
||
|
Index |
December 2015 |
Fourth Quarter 2015 |
2015 YTD |
|
DJIA |
-1.5% |
7.7% |
0.2% |
|
S&P 500 |
-1.6% |
7.0% |
1.4% |
|
Nasdaq Composite |
-2.0% |
8.4% |
5.7% |
Global markets underperformed the US markets in 2015 and emerging markets stocks lagged their developed market counterparts by a wide margin. Small caps outperformed large caps, and growth outperformed value. Once again, Chinese economic weakness, oil, commodities and central bank actions drove uncertainty and underperformance for the year. Almost every sector declined in the EAFE, with health and utilities barely squeaking into positive territory.
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|
Total Returns |
||
|
Index |
December 2015 |
Fourth Quarter 2015 |
2015 YTD |
|
MSCI EAFE (Developed) |
-1.4% |
4.7% |
-0.8% |
|
MSCI Emerging Markets |
-2.5% |
0.3% |
-17.0% |
Fixed income performance was relatively weak in 2015. Bonds were more volatile and yields trended higher as the Federal Reserve made its first interest rate hike since 2006, raising the federal funds target rate by 25 basis points on December 16. Investors favored high-quality bonds as concerns about the high-yield market triggered record outflows from corporate bond funds.
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|
Total Returns |
||
|
Index |
December 2015 |
Fourth Quarter 2015 |
2015 YTD |
|
Barclays US Aggregate Bond Index |
-0.03% |
-0.06% |
0.6 |
Source: Morningstar Direct; Russell, MSCI, Barclays, Citigroup, and Dow Jones benchmarks.
Domestic equities struggled in December, but due to solid gains during the rest of the fourth-quarter, the year finished essentially flat. Stocks outperformed bonds for the fourth consecutive year, the S&P Composite climbed to an all-time high in May, and several sectors were buoyed by merger and acquisition activity. According to data from Dealogic, 2015 was the biggest year for global M&A with over $5 trillion in transactions and $2.5 trillion in the US. Large-cap benchmarks outperformed small-cap benchmarks for the year and growth outperformed value. The 50 largest stocks at the beginning of 2015 were up an average of 1.5% by year-end, while the 50 smallest stocks were down 11.9%. However, worries about global economic growth, China, interest rates, commodities and the energy sector were a drag. Consumer discretionary was the best performing sector for the year up 10.1%, while energy was the worst performing sector down 21.1% as oil prices ended the year at an 11 year low, and commodities had their fifth consecutive year of negative price returns.
