October marked the first down month for domestic stocks since May with the S&P 500 Index declining -1.9%. Foreign stocks, in maintaining their positive short-term momentum, gained 0.8% as measured by the MSCI EAFE Index. Large-caps outperformed small-caps, which worked in favor of our current allocation; however, value stocks significantly outperformed growth stocks. While we have exposure to both value and growth stocks, the tilt is towards growth, which detracted from performance last month.
The underperformance of growth relative to value was largely due to weakness in the technology sector, which produced softer-than-expected third quarter earnings reports from major names like Apple, Amazon, and Google. Although earnings results for the sector as a whole were little different from those of the overall market, the headlines caused by these earnings shortfalls at well-known companies shook investors and resulted in a -6.3% sell-off in the S&P 500’s technology sector in October…
Please watch the video below of our complete Market Analysis.