4th Quarter 2014 Market Update

q4_mkt_overviewThe economy continued to improve in Q4 2014. Third quarter statistics were released, showing GDP growth of 5% and a consumer spending increase of 3.2%. Falling gas prices benefited consumers, resulting in increased discretionary spending while keeping inflation modest. US stocks finished strong in the 4th quarter as the S&P Index gained 4.9% for the period coming in at 13.7% for the year. Falling oil prices were not welcome for US energy stocks which closed the quarter down more than 10%. The Fed ended its bond buying program in October, but there is no consensus from market watchers on when interest rates will inevitably rise. Declining yields pushed up bond returns during the quarter with Treasuries slightly outperforming mortgages and investment-grade corporate bonds. The strengthening US dollar hurt international investors for both the quarter and the year as the MSCI EAFE Index gained 6.4% in local currencies, but when returns were converted to US dollars, finished down 4.5% for the year. Real estate was a bright star for the year as the NAREIT Equity REIT Index gained 28.7%. Commodities continued to decline on weak global growth and low demand from hard-hit energy companies, losing 12.1% for the quarter and down 17% for the year.

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