Global equity markets ended 2017 on a high note. Economic growth was steady across
nearly all major developed economies, employment numbers remained strong, and
inflation remains low. Despite political uncertainty and diplomatic tensions, equity
markets had a great year. Large-cap stocks in the S&P 500 index gained another +6.6%
in the fourth quarter to end the year up +21.8%. Stocks of smaller companies, represented
by the S&P SmallCap 600 index, also did well. They gained +4.0% in the fourth
quarter and +13.2% for the year.
International stock markets managed to keep up with the strong domestic-market
performance in 2017. The MSCI Europe, Australasia, and Far East (EAFE) index gained
+4.2% for the fourth quarter, finishing up +25.0% for the year. Emerging-market
equities did even better, gaining an impressive +37.3% in 2017.
Bonds were modestly positive, with the Barclays U.S. Aggregate Bond index gaining
+0.4% in the fourth quarter. As economic conditions continue to improve, short-term
rates have risen, while long-term rates have remained low. Inflation is still muted in the
United States, which is helping keep rates down.
The Financial Engines perspective.
The year 2017 ended on positive note as global growth continues to improve. Market
volatility has remained unusually low in recent months. But this does not mean that risk
is absent. Sudden political events or economic turmoil could change market sentiment
quickly. It is important to remain diversified to help weather potential storms and reach
your long-term goals. At Financial Engines, we continue to monitor market conditions
to keep your portfolio allocation on track.
Financial Engines advisors are here to help.
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