Market Commentary

The Federal Reserve’s decision to increase interest rates further strengthened the dollar, thus applying more pressure to crude oil and emerging markets. Stocks lost their footing during the month, with domestic large caps returning -1.6% and small caps -5.0%. In the S&P 500, defensive sectors generated positive results while cyclical/export sectors (e.g., energy, manufacturing, cyclicals) ended in the red. Bond markets also experienced volatility, as shorter-term interest rates drove Treasury prices lower. Corporate bonds, fueled by liquidity concerns in the high yield bond market, ended the month lower. The lone bright spot were REITs, which continue to benefit from the strength of the domestic housing recovery.

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