Monthly Market Monitor - May 2012

Market Indices1MayYear-to-Date
S&P 500-6.01%+5.16%
Russell 3000-6.18%+5.20%
MSCI EAFE-11.35%-3.43%
MSCI Emerging Markets-11.16%+0.20%
Barclays U.S. Aggregate Bond+0.90%+2.33%
Barclays Municipal+0.83%+3.78%
Barclays US Corporate High Yield-1.31%+5.05%



Global stocks dropped in May on concerns that Greece may leave the euro-zone, while growing anti-austerity sentiment in France and southern Europe eroded confidence that EU leaders can contain Spain's debt and banking woes. Europe's erosion essentially sparked elevated fears for a longer worldwide economic slowdown, including an easing of momentum in the United States. The month ended with a downward revision of the U.S. GDP growth rate for the first quarter to 1.9% from 2.2%. The benchmark S&P 500 fell just over 6% last month, its worst May performance in two years and largest monthly decline since September 2011. The Dow Jones Industrial Average shed over 820 points (-5.8%), while the technology-focused NASDAQ Composite declined more than 7%. Small-cap stocks fared no better, as the Russell 2000, a proxy for small-cap equities, sank 6.6%. As oil inventories reached a 22-year high, crude oil futures fell nearly $19 to $86.53 per barrel (-17.8%), its biggest monthly decline since 2008.

In U.S. sector performance, eight of the ten S&P 500 major market groups delivered negative May returns with six sectors falling more than 5%. Energy (-10.2%) and Financials (-9.1%) suffered the biggest setbacks as oil plunged and JPMorgan's $2B trading blunder caused its shareholders to lose over 22% of their value. Losses in Materials (-7.8%), Technology (-7.7%) and Industrials (-6%) also characterized the extent of investors cashing in profits and moving to the sidelines. Only Telecom and Utilities delivered gains last month, up 2.6% and 0.6% respectively. For the year, Consumer Discretionary (+10.8%), Telecom (+10.4%) and Technology (+10.1%) are the top sector performers.

As bad as it was in the U.S., overseas market performance was much worse. The MSCI EAFE Index, representing 22 of the world's 24 developed markets, but excluding the U.S. and Canada, sank 11.4% in May. Emerging markets similarly sold off, as the MSCI Emerging Markets Index fell 11.2% last month, its worst May decline since 1998. The so-called BRIC index that measures performance of stocks in Brazil, Russia, India and China entered a bear market as the gauge retreated 21% from its 2012 peak on March 2nd. Gold prices fell for a fourth straight month, falling $104 (-6.3%) to $1560.43 per ounce. Gold retreated as the US dollar strengthened against most world currencies and as India, the world's largest gold buyer, continued to experience economic slowing.

While the May selloff erased more than $4 trillion in worldwide equity valuations, investors sought out the relative safety in U.S. government debt. Buyers of the benchmark 10-year Treasury note stirred a May price rally that pushed its yield down over 35 bps to a post-World War II record low of 1.56%.

U.S. investment grade bonds edged higher last month, as measured by the 0.9% gain on Barclays US Aggregate Bond Index. Municipal bonds, as measured by the Barclays Municipals Index, delivered a positive return of 0.8% in May. Municipals extended their positive YTD return to 3.8% through May from the 2.9% return in April. Non-investment grade corporate bonds fell 1.3% last month, according to the Barclays US Corporate High-Yield Index. The decline trimmed its YTD gain to 5%, but remains the top performing fixed-income asset group for the year.

  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.

Additional risks are associated with international investing, such as currency fluctuations, political and economic instability, and differences in accounting standards.

Affiliates and subsidiaries and/or officers and employees of Multi-Financial Securities Corporation may from time to time acquire, hold or sell a position in the securities mentioned herein.

 

Twin Cities Retirement Income Planning | Financial Planning Associates
5201 Duncraig Road
Edina, MN 55436
Phone: 952-929-2577 Fax: 952-928-3799

Securities and advisory services offered through Cetera Advisors LLC, member FINRA, SIPC. Cetera is under separate ownership from any other named entity.

1200 S Washington Ave  Suite 270 Minneapolis MN 55415

We are licensed to sell Insurance Products in the following states:  Minnesota, Indiana

We are registered to sell Securities in the following states: California, Minnesota, Iowa, Indiana

 

Financial Planning Associates and Venture  Development Inc. and RE/MAX Results are not affiliated with Cetera Advisors LLC.

This site is published for residents of the United States only. Registered Representatives of Cetera Advisors LLC may only conduct business with residents of the states and/or jurisdictions in which they are properly registered. Not all of the products and services referenced on this site may be available in every state and through every advisor listed. For additional information please contact the advisor(s) listed on the site, visit the Cetera Advisors LLC site at www.ceteraadvisors.com

The registered representative(s) and/or investment adviser representative(s) listed on this website are licensed and registered in the following states:

We are licensed to sell Insurance Products in IN,MN.

[ Online Privacy Policy | Important Disclosures | Business Continuity | Privacy Promise | Order Routing Disclosure | Cetera Advisors ]