October 2017 Financial Markets Summary

The third quarter has been far from quiet with Hurricanes Harvey and Irma, increased tensions with North Korea, the German election and the Equifax data breach.  However, global stock markets have been very resilient to these events and continue climbing higher.  International stocks led the way for the quarter with developed markets increasing by over 5% and emerging markets by almost 8%.  Improving economic data and a weaker U.S. dollar has helped boost investor returns overseas.  Domestic stocks were not far behind with returns of 2.8%-5.3%.  More recently, small cap domestic stocks rallied due to potential tax reform.

The released tax reform details provide a framework for discussion going forward and as proposed, it would represent the largest overhaul of the tax system since 1986.  Key components included a change to the number of tax brackets, a lower corporate income tax, changes to the standard deduction and more.  Time will tell if Congress can actually agree to any true tax reform but it appears this could be a stimulus for stocks.

Charles Schwab’s Liz Ann Sonders provided some interesting insight as we look into the balance of the year.  “Typically, the fourth quarter sees quite a bit of action, with budget battles – both political and corporate – hiring and firing announcements for the next fiscal year, money managers positioning for year-end, and the all-important holiday shopping season all gracing the calendar.  There are also seasonals to consider.  Since 1952, October has been the second worst performing month of the year, while November and December have been the 3rd and 2nd best performing months, respectively.”

Solid economic growth and corporate earnings could allow the bull market to continue but do not be surprised if we experience bouts of volatility and/or pullbacks.  Stay diversified and disciplined around your long-term objectives.

2017 continues to be a reminder that today’s headlines and tomorrow’s reality are seldom the same.

Asset Index Category Category Category Category 10-Year
3 Months 2017 YTD 2016 Average
S&P 500 Index – Large Companies 3.9% 12.5% 9.5% 5.1%
S&P 400 Index – Mid-Size Companies 2.8% 8.1% 18.7% 7.3%
Russell 2000 Index – Small Companies 5.3% 9.9% 19.4% 6.3%
MSCI ACWI – Global (U.S. & Intl. Stocks) 4.7% 15.4% 8.4% 1.9%
MSCI EAFE Index – Developed Intl. 5.4% 19.9% 1.0% 1.6%
MSCI EM Index – Emerging Markets 7.9% 27.8% 11.2% 2.4%
Short-Term Corporate Bonds 0.5% 1.7% 2.1% 2.5%
Multi-Sector Bonds 0.8% 3.1% 2.6% 4.3%
International Government Bonds 2.3% 7.9% 1.6% 2.7%
Bloomberg Commodity Index 2.5% -2.9% 11.8% -6.8%
Dow Jones U.S. Real Estate 1.1% 7.1% 7.6% 5.3%


Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment, strategy, or product or any non-investment related content, made reference to directly or indirectly in this newsletter, will be suitable for your individual situation, or prove successful. This material is distributed by PDS Planning, Inc. and is for information purposes only.  Although information has been obtained from and is based upon sources PDS Planning believes to be reliable, we do not guarantee its accuracy.  It is provided with the understanding that no fiduciary relationship exists because of this report.  Opinions expressed in this report are not necessarily the opinions of PDS Planning and are subject to change without notice.  PDS Planning assumes no liability for the interpretation or use of this report. Consultation with a qualified investment advisor is recommended prior to executing any investment strategy. No portion of this publication should be construed as legal or accounting advice.  If you are a client of PDS Planning, please remember to contact PDS Planning, Inc., in writing, if there are any changes in your personal/financial situation or investment objectives.  All rights reserved.