The S&P 500 index grew yet again in the third quarter with a 1.7 percent gain, following the gain of 4.3 percent in the first quarter. However, from a risk perspective, performance was much more mixed compared to the broad strength experienced in the first half of 2019. U.S. small cap stocks were down 2.4 percent in the third quarter while developed international and emerging market stocks declined roughly 1.1 percent and 4.3 percent, respectively. What’s more, even with the indices generating positive returns, the drivers of performance shifted to more defensive sectors like consumer staples and utilities, which in our view is not a bullish sign.
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