Research & Insights

Kai W. Hong, CFA
Managing Director & Chief Investment Strategist

As uncertainty built around the outcome of the US presidential election, investors appeared reluctant to take significant positions and the market drifted steadily downwards. Consumer spending showed some softening, and general economic data continued to be modest. Job growth was below expectations, but average hourly waged showed strong increases. That said, Q3 US GDP was reported to have accelerated to 2.9% on improved trade and spending. Given the data, the US Fed continued to lay the groundwork for a December rate increase. Oil prices briefly passed $50/barrel as producers contemplated supply constraints but fell back on a lack of consensus for action. The British pound fell significantly during the month as investors contemplated the impacts of a “hard Brexit”. The decline was also exacerbated by a lack of liquidity in the market. At the corporate level, M&A continued to be robust as prospects for organic growth remained challenged.

The Russell 3000 Index finished the month at -2.2%. At the sector level, Financials and Technology led by declining less while Health Care was a meaningfully negative. US small cap stocks reversed their recent gains with the Russell 2000 Index returning -4.8%. Outside of the US, market performance was mixed. The developed market MSCI World ex USA Index returned -1.9% while the developing market MSCI Emerging Markets Index returned +0.2%.