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Monthly Market Monitor - August 2013 Recap

Market Indices1AugustYear-to-Date
S&P 500-2.90%+16.15%
Russell 3000-2.79%+16.95%
MSCI EAFE-1.31%+8.54%
MSCI Emerging Markets-1.68%-9.94%
Barclays US Aggregate Bond-0.51%-2.81%
Barclays Municipal-1.43%-4.92%
Barclays US Corporate High Yield-0.61%+2.71%



After July's solid gains, the S&P 500 fell in August, as investors grew concerned that the Federal Reserve may reduce the amount of its bond purchases as early as this month. Last month's decline in the S&P 500 was its worst pullback since May 2012. Stocks extended losses after President Obama said Syrian President Bashar al-Assad's use of chemical weapons against his own people was a global threat and the U.S is prepared to hold the Assad regime accountable. Investors are concerned that a U.S. led attack against Syria may spark a larger regional war. The VIX Volatility Index surged by over 26%, the most since May 2012, to a two-month high of 17.01. Despite the upheaval, August trading volume has been especially light with an average of around 5.5 billion shares changing hands each day, the second-slowest month in over five years.

Smaller-capitalized stocks slightly underperformed large-caps as the Russell 2000, a proxy for small-cap equities, fell 3.2% in August. Value stocks fell more than growth stocks as the Russell 1000 Value Index lost 3.8% while the Russell 1000 Growth Index fell 1.7%. On a year-to-date (YTD) basis however, value continues to outperform growth as the Russell 1000 Value Index remains up 17.5% versus 16.9% for the Russell 1000 Growth Index. Commodities, as measured by the S&P GSCI Index, outperformed both stocks and bonds in August, gaining 3.4% and turned positive for the year, up 2.6%. Gold futures rallied 5.3% last month, trimming its YTD loss to 16.7%, and West Texas Intermediate (WTI) crude oil futures gained for a third straight month, jumping 3.3% in August.

All ten major sector groups ended negative last month. Financials (-5%), Utilities (-5%) and Consumer Staples (-4.4%) fell the most, while Technology (-0.5%) and Materials (-0.02%) fell the least. For the year, seven of the ten major S&P 500 sectors continue to post double-digit gains, led by Healthcare (+24.5%), Consumer Discretionary (+22.5%) and Financials (+19.6%). Telecom has gained the least so far this year, up just 6.2%.

Overseas developed markets outperformed the U.S. last month as the MSCI EAFE Index fell by 1.3%. Emerging markets, as measured by the MSCI Emerging Markets Index, fell 1.7% in August after climbing 1.1% in July. The MSCI Emerging Market Index extended its YTD loss to 9.9%.

Treasuries, as measured by the Barclays U.S. Government Bond Index, declined by 0.5% on the month, extending its YTD loss to 2.6%. The yield on 10-year U.S. Treasury notes increased by 18 basis points in August to end the month at 2.78%. U.S. investment grade bonds, as measured by the Barclays U.S. Aggregate Bond Index, also fell by 0.5% last month, extending its YTD loss to 2.8%. Municipal bonds, as measured by the Barclays Municipals Index, sank 1.4% in August and extended its YTD decline to 4.9%. The Barclays U.S. Corporate High Yield Index, a proxy for non-investment grade corporate bonds, fell by 0.6%, trimming its YTD gain to 2.7%.
  1. Morningstar Direct (all performance percentages are total return based, which include reinvested dividend, interest)

This information is compiled by Cetera Financial Group. No independent analysis has been performed and the material should not be construed as investment advice. Investment decisions should not be based on this material since the information contained here is a singular update, and prudent investment decisions require the analysis of a much broader collection of facts and context. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

All economic and performance information is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot directly invest in unmanaged indices. Please consult your financial advisor for more information.

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