Third Quarter Market Update
The major U.S. indices were mixed in the third quarter with small and mid cap indices taking a hit and the Dow, S&P and bonds pretty much flat. Foreign markets were down a little, and some, more than a little. Not a good year in many foreign markets.
This U.S. outperformance raises questions about its origins and whether or not it is sustainable. Our view is that U.S. outperformance in our markets and our economy is the result of better U.S. fundamentals, mainly financial stability and new jobs, especially in important sectors like construction and manufacturing.
We believe these are multi-year trends that will continue to support our stock market into 2015 and beyond. The potential headwinds will most likely be a higher dollar and higher interest rates. However, we think these two factors can largely be mitigated by a strong domestic economy and a better lending environment for banks.