Confusion, terrorism and risk in general hang heavy over the global economy, but Mr. Market is getting used to the noise.
Measured by year-to-date returns, the broad stock market continues to post returns firmly in the black. The Russell 3000 Index, for instance, has climbed 2.6% so far this year, through August 10, as the table below shows.
But lest we get too excited, it’s worth mentioning that 2.6% is less than spectacular in a world where a low-cost money market fund offers a yield nearly twice as high. Risk, in short, just isn’t paying off like it used to.
In addition, much of the rise in the stock market this year comes on the back of value stocks. The Russell 3000 Value has risen nearly 8.8% year to date. By contrast, the Russell 3000 Growth is down more than 3%.
In fact, all measures of growth are in the red so far this year across the large-, mid- and small-cap equity spectrum for U.S. stocks, as you can see from the graph below.
Equity investors are in a defensive mood this year, a notion supported by looking at the ten major sectors in the S&P 500, where cyclically sensitive stocks have tumbled so far in 2006. Info tech stocks have suffered the most, falling by more than 9% this year. Meanwhile, consumer staples, utilities and energy continue to shine.
