The S&P 500 Index finished the quarter with a total return of 4.48%.The Dow Jones Industrial Average rose 5.58% and the Nasdaq Composite increased 6.07% on a total return basis for the quarter. Ten of the eleven sectors in the S&P 500 posted positive returns during the period. Information Technology and Energy were the biggest outperformers with returns of 8.65% and 6.84%, respectively. Small-cap stocks outperformed large-cap stocks, which beat mid-cap names. Specifically, the Russell 2000 Index’s 5.67% gain surpassed the returns of both the Russell 1000 Index and the Russell Mid-Cap Index which posted 4.48% and 3.47%, respectively for the quarter. Growth stocks beat their value counterparts, as the Russell 1000 Growth Index rose 5.90% compared to the 3.11% return of the Russell 1000 Value Index over the same period. The US Dollar Index declined 2.67% for the quarter and is down 8.94% for the year. Oil increased 12.23% over the quarter, but is down 3.82% for the year. Gold was up 2.82% for the quarter and 10.22% for the year.
The market continued to climb over the quarter ignoring the majority of negative news. Much of the news cycle was taken up by the three failed attempts at an Obamacare repeal bill, with hopes now moving to tax reform. North Korea continued to carry out nuclear tests, while tension with the US escalated. The US issued additional sanctions on Russia. Chancellor Angela Merkel won a fourth term in the German elections, but it was the worst result for the alliance between the Christian Democrat and Christian Social Union since 1949. In addition, the hard-Right AfD party won its first seats in parliament. The Iraqi Kurds overwhelmingly voted for independence, along with Catalonia, which voted for independence from Spain with a voter turnout of 40% due to the Spanish government trying to repress voting. Terrorist attacks continued around the world, and natural disasters disrupted much of the world with hurricanes, earthquakes, flooding and wild fires. The Fed kept rates the same at its September meeting, but began unwinding its $4T balance sheet planning to start shrinking the balance sheet by $10B a month gradually rising over the next year to $50B a month. The ECB decided to keep interest rates unchanged.
The views expressed in this commentary reflect those of Miller Value Partners analysts as of the date of the commentary. Any views are subject to change at any time based on market or other conditions, and Miller Value Partners disclaims any responsibility to update such views. The information presented should not be considered a recommendation to purchase or sell any security and should not be relied upon as investment advice. It should not be assumed that any purchase or sale decisions will be profitable or will equal the performance of any security mentioned. Past performance is no guarantee of future results.
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