Milliman FRM Market Commentary: October 2018

In October, the S&P 500 posted its deepest monthly loss in seven years. In this month’s commentary, Milliman’s Joe Becker addresses the following:

• With a -6.8% return in October, the S&P 500 locked in its first calendar-month loss since March and its largest since September 2011.
• The decline wiped out nearly three-fourths of the year-to-date (YTD) return it had earned through the end of September.
• No other segment of the equity market offered any haven; mid- and small-cap stocks were down 9.5% and 10.5%, respectively, while developed and emerging market equities fell 8.1% and 8.6%, respectively.
• Emerging market (EM) equities are down 22.7% from their 2018 peak in January and down 15.1% YTD, erasing more than half of their 37.7% return in 2017.
• Consumer staples and utilities were the only positive sectors in October, while industrials, energy, and consumer staples endured the biggest sector losses.
• The volatility of the S&P 500 in October was more than four times what it was in September and more than twice its five-year average.
• As is often the case amidst market turmoil, the correlation of the S&P 500 with other segments of the equity market trended higher, while moving sharply lower against the U.S. aggregate bond market, higher interest rates notwithstanding.

To learn more, download the full commentary at MRIC.com.

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