The S&P 500 Large Cap Index lost 16.8 percent, the S&P 400 Mid Cap Index declined 21.74 percent, and the S&P 600 Small Cap Index fell 20.15 percent. Small cap stocks had beaten larger companies for most of the year as the U.S. subprime-mortgage collapse took a steeper toll on bigger banks and brokerages, while surging energy and materials prices benefited smaller producers more.
Investor sentiment for small cap stocks was hurt because they likely to be weighed down more than large cap stocks by their significant exposure to weakening domestic demand. Also hurting their performance in October was the swiftness and severity of redemptions and fallout in the hedge fund community certainly exacerbated the trend. According to Bloomberg data, hedge funds own an average of 13 percent of shares in the Russell 2000.
Consumer staples held up its reputation as a defensive sector as companies that manufacture and sell food/beverages, tobacco, and household products reported healthy earnings. Healthcare, telecoms, and utilities benefited from investors seeking safety in defensive companies with high-yields.
On the other end of the performance spectrum, consumer discretionary stocks suffered from weakening consumer spending, while energy and material stocks suffered from commodity prices worst decline in half a century.
International markets continued to tumble with MSCI EAFE Index declining more than 20 percent and down more than 42 percent on the year. Despite surging more than 20 percent in three days during the last week of the month, the emerging market stocks still lost over 20 percent in October and are off nearly 50 percent in 2008.
Market performance as of 10/31/2008.
No comments:
Post a Comment