Month in the markets: US can’t stop outperforming
There was a trend of better performance among large stocks in October.
5th November 2021 10:33
by Tom Bailey from interactive investor
There was a trend of better performance among large stocks in October.
The US market experienced its best monthly performance so far this year in October, with the S&P 500 racking up a gain of just over 7%. This was the index’s best monthly performance since last November, the month of the Covid vaccine announcements.
During the month, the index also hit several new highs. It ended the month at 4,605 points. Year-to-date it has now seen a price return of 24%.
- Tom Bailey: S&P 500 secret committee concerns don’t worry me much
- Investing in the US stock market: a beginner’s guide
- US bitcoin ETF – what you need to know
Much of the rest of the US market saw positive returns in October. However, there was a trend of better performance among large stocks, with small- and mid-caps underperforming. The S&P MidCap returned 5.9%, while the S&P SmallCap 600 was up 3.4%. In contrast, the S&P 500 Top 50 outperformed, returning 8.3%. This index consists of 50 of the largest companies from the S&P 500 and therefore reflects US mega-cap performance.
Every US sector saw positive performance. The best returns were found among consumer discretionary companies, with the sector rising by 10.9%. This was closely followed by energy, with a return of 10.4%. Energy is now the best-performing sector year-to-date, with returns of 58%. Consumer services was the worst-performing sector in October, rising by 2.8%.
When it came to factors, growth saw the strongest performance, with the S&P 500 Growth Index returning 9.1%. Momentum and quality also experienced strong returns, at 7.4% and 6.1%, respectively. S&P 500 Low Volatility High Dividend was the laggard, returning 2%.
Returns were also strong in Europe, albeit below those in the US. The S&P Europe 350 index returned 4.7%, its best month since March. In common with the US, European small- and mid-caps trailed, with the S&P Europe MidCap returning 2.4% and the S&P Europe 2.8%.
- Tom Bailey: BlackRock voting rules help ward off index criticism
- The two theories driving green and ethical ETF demand
- Is your S&P 500 ETF at risk of China slowdown?
The S&P United Kingdom Index returned 2.3%. According to S&P, the UK and Switzerland were the top contributors to the S&P Europe 350 Index. Austria was the sole detractor.
The US resumed its regular role as the world’s best-performing major market. Compared to the S&P 500’s 7% return, the S&P Developed BMI returned 5.4%. Removing the US from that index sees its returns fall to 2.5%. Emerging markets also underperformed, returning 1% in October.
Disclosure
We use a combination of fundamental and technical analysis in forming our view as to the valuation and prospects of an investment. Where relevant we have set out those particular matters we think are important in the above article, but further detail can be found here.
Please note that our article on this investment should not be considered to be a regular publication.
Details of all recommendations issued by ii during the previous 12-month period can be found here.
ii adheres to a strict code of conduct. Contributors may hold shares or have other interests in companies included in these portfolios, which could create a conflict of interests. Contributors intending to write about any financial instruments in which they have an interest are required to disclose such interest to ii and in the article itself. ii will at all times consider whether such interest impairs the objectivity of the recommendation.
In addition, individuals involved in the production of investment articles are subject to a personal account dealing restriction, which prevents them from placing a transaction in the specified instrument(s) for a period before and for five working days after such publication. This is to avoid personal interests conflicting with the interests of the recipients of those investment articles.