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.

Have questions?

Financial Engines advisors are here to help.

© 2018 Financial Engines. All rights reserved. This publication is for informational purposes only and does not constitute investment advice or an offer to buy or sell any security. Future market movements may differ significantly from the expectations expressed herein, and past performance is no guarantee of future results. Financial Engines assumes no liability in connection with the use of the information and makes no warranties as to accuracy or completeness. Future results are not guaranteed by any party. Financial Engines® is a trademark of Financial Engines, Inc. All other intellectual property belongs to their respective owners. Index data is derived from information provided by Standard and Poor’s, Barclays Indices, and MSCI. The S&P 500 index and the S&P SmallCap 600 Index are proprietary to and are calculated, distributed and marketed by S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC), its affiliates and/or its licensors and has been licensed for use. S&P®, S&P 500® and S&P SmallCap 600®, among other famous marks, are registered trademarks of Standard & Poor’s Financial Services LLC, and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC.© 2016 S&P Dow Jones Indices LLC, its affiliates and/or its licensors. All rights reserved. Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used to create any financial instruments or products or any indices. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages.