I certainly hope that this note finds you all doing well. This quarter we are trying something new and our investment performance is in a different format; please click here to download it. We hope you find it easy to navigate, we invite your feedback on it, and, as always, please let us know if you have questions.
In third quarter, stocks rose worldwide supported by strong corporate earnings, renewed tax reform hopes, and steady economic growth. The S&P 500 index advanced 4.5% during the quarter, bringing the year-to-date return to 14.2%. The world is still an uncertain place but market volatility remained low during the quarter. Growth stocks continued to outperform value driven largely by strong performance in the technology sector. International, particularly emerging markets, posted impressive returns and outperformed U.S. counterparts. Treasury yields fell in third quarter and then rebounded slightly to end the quarter largely unchanged. The Fed has signaled that another rate hike could come in December.
We encourage investors to stay the course. Those that have done that this year have been rewarded in diversified portfolios. We continue to like value investments over growth because value tends to have lower volatility and has beaten growth over the long-term time horizon. Also, growth valuations are not attractive. As 2018 approaches we will be watching the tax reform conversations but, thus far, the market seems to like the prospects of reform. We could see volatility around the next chair of the Federal Reserve and their thoughts on interest rates but bond markets should be fine in the long-term. Many have concerns on domestic stocks and their valuations moving to record levels but we do not expect a significant downturn in light of strong profits and other solid fundamentals.
Moravian Ministries Foundation in America is excited to head toward 2018. We will continue to do all we can to meet the needs of those we serve. Please call on us if we can help in any way. Onward toward another New Year.