Fourth Quarter 2014 Market Recap

(For the quarter ended December 31, 2014.)

Autumn’s twists and turns did not deflect the stock market from its upward climb. When the dust settled on New Year’s Eve, the S&P 500 ended up more than 4% on the quarter and more than 11% on the year, despite sharp dips in mid-October and mid-December. The NASDAQ Composite had taken some sharper turns but also ended up posting strong gains. The markets seemed buoyed by a strong performance from GDP, which grew at an annual rate of 5% in the third quarter. Inflation remained tame and interest rates stayed low.

Through 12/31/14*Quarter1-Year3-Year Annualized5-Year AnnualizedClosing Value
S&P 5004.39%11.4%17.9%13.0%2,058.90
Dow Jones Industrials4.58%7.5%13.4%11.3%17,827.07
NASDAQ Composite5.40%13.4%22.0%15.9%4,736.05

Source: Wealth Management Systems Inc. The S&P 500, Dow Jones Industrials, and NASDAQ Composite are unmanaged indexes. It is not possible to invest directly in an index. Past performance is no guarantee of future results.

*Price only. Does not include dividends.

Fed watch The central bank has wrapped up its bond buying program, concluding that the economy no longer needed the stimulus. But it also signaled that it will be “patient” about deciding when to start increasing interest rates.

Improving job market The unemployment rate in November stood at 5.8%, down more than a full percentage point from one year earlier. The Labor Department reported that the rate declined in 341 of the 372 metropolitan areas in the United States. It increased in 27 and remained steady in the remaining four.

Bond rates remain low The benchmark yield on the 10-year Treasury bond edged down about a quarter of a point during the quarter, implying a modest increase in the value of existing bonds. The indicative yield on investment grade corporate bonds followed a similar path.

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