U.S. equity markets rose again during the third quarter of 2013 as investors continued to purchase riskier assets in search of higher returns. The S&P 500 Index returned 5.2%, including dividends, finishing the quarter just 2% below its all-time high reached on September 18, 2013. Equity markets traded off in the final days of September as political debates over the debt ceiling ensued in Washington D.C. In addition, the market's momentum slowed as valuations moved above average historical levels, prompting some investors to take money out of equities. Year-to-date, the S&P 500 Index total return was 19.8%.
After a difficult start to the third quarter for the bond markets, fixed income investors were given a reprieve when the Federal Reserve again surprised the markets with an announcement related to its bond buying program (QE). After prepping the global capital markets in May for a 'tapering' of QE, Chairman Bernanke announced in September that the committee had decided to continue purchasing securities at the same pace and pledged to keep interest rates low for the foreseeable future. The bond market reacted positively to the announcement pushing interest rates back down. The 10-Year U.S. Treasury yield began the quarter at 2.49%, touched 3% on September 5, and then ended the quarter at 2.63%. Continue Reading »