Innovest's August 2009 Market Commentary

Please click here to read the August 2009 Market Commentary.

The Markets

During the month of August, the S&P 500 Index posted its sixth consecutive monthly gain.  The Index has now returned 40.5% over the past six months, representing the largest six-month gain since 1975.   For the month, nearly all equity markets provided positive returns for investors, although the size of the gains were somewhat muted compared to July’s.  Many companies benefited from announcing “less bad” news, as second quarter earnings often exceeded dire expectations.  However, while the majority of companies were able to exceed projected earnings estimates, many continue to fail to achieve top-line growth. This lack of revenue growth suggests that businesses have been able to dramatically cut costs, but in many instances have yet to see the return of organic growth.  Within equity markets, the most impressive gains were found among more value-oriented indexes, which noticeably outperformed their growth counterparts.  This dispersion in returns was largely influenced by the continued rebound of many financial companies.  It is interesting to note that since 3/9/09, the top performing sector in the S&P 500 has been financials, returning an astounding 137.5%.  International stocks, within developed countries, slightly outperformed domestic equities, while emerging markets tended to underperform after months of significant gains. Within the fixed income markets, the Barclays Capital Aggregate Index was slightly positive for the month.  High yield bonds and floating rate leveraged loans continued to perform well, and for the first eight months of the year, these two asset classes have returned approximately 40%.  Finally, REITs continued to rebound strongly following significant losses earlier year.

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