Market Commentary: Third Quarter

 The third quarter of 2018 was generally good for the U.S. stock markets, especially large growth companies. The fairly strong U.S. markets were mostly offset by foreign stock market performance. The strengthening U.S. dollar provided a strong headwind for foreign investments, especially the emerging markets asset class. The U.S. economy seems to have responded to lower tax rates, and the possibility of pending trade deals, driving the labor force to nearly full employment. 

The U.S. stock market represented by the S&P 500 rose 7.71% for the quarter, and the international stock market represented by the Europe, Australia, Far East (EAFE) Index was up 1.35%. Small companies represented by the Russell 2000 Index were up 3.38% for the quarter. 

The Federal Reserve increased the federal funds rate another ¼ of a percent to a range of 2.0% to 2.25%. This interest rate increase was highly anticipated, and the announcement did not shake the bond or equity markets. The Barclays U.S. Govt. Credit 1-5 Index was slightly positive for the quarter, ending up 0.26%. 

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