Market Attributes: U.S. Equities May 2019

Market Attributes

U.S. Equities May 2019

KEY HIGHLIGHTS

The S&P 500? was down 6.58% in May, bringing its YTD return to 9.78%. The Dow Jones Industrial Average? lost 6.69% for the month and rose 6.38% YTD. The S&P MidCap 400? fell 8.13% for the month and was up 8.87% YTD. The S&P SmallCap 600? returned -8.85% in May and 5.18% YTD.

Exhibit 1: Index Returns

INDEX

1-MONTH (%)

3-MONTH (%)

YTD (%)

1-YEAR (%)

S&P 500

-6.58

-1.16

9.78

1.73

Dow Jones Industrial Average

-6.69

-4.25

6.38

1.64

S&P MidCap 400

-8.13

-5.23

8.87

-6.98

S&P SmallCap 600

-8.85

-8.73

5.18

-11.79

Source: S&P Dow Jones Indices LLC. Data as of May 31, 2019. Past performance is no guarantee of future results. Table is provided for illustrative purposes. Returns shown are price returns.

MARKET SNAPSHOT

What a difference a month makes. Last month we ended at a closing high, while this month the S&P 500 ended two-thirds of the way to a correction (-6.58%), posting four consecutive weeks of losses (-6.57%), an event not seen since October 2014 (-6.15%; the last five-week run was in June 2011, -6.80%).

Trade took center stage this month, with the audience staying in their chairs, but the S&P 500 going south, off 6.58%, its worst monthly return since December 2018's -9.18% and worst May return since the -8.20% of May 2010. Trump increased the tariffs on USD 200 billion of Chinese imports to 25% from 10% and started the process for an additional USD 325 billion, in what now appears to be the Terrible Twos--trade and tariffs. The tune changed (but not the direction of the market) to It Cuts Both Ways, focusing in on "can't be together, cannot live apart" and appearing to show the U.S.-China interdependency. While some boastfully said "sell in May and go away" (not sure how many actually did that, however), more appeared to wait for next month's G-20 meeting in Osaka, Japan, where Trump will be meeting with Xi Jinping, with many holding out hopes for a meeting of the needs (which may be more consistent and lasting than a meeting of the minds). Either way, corporate executives are starting to make plans for a possible trade war (retail and chip makers were first to publicly declare),

Contributor:

Howard Silverblatt, Index Investment Strategy, Senior Industry Analyst, howard.silverblatt@

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U.S. Equities

May 2019

and if they move it (supplies and production), it will cost (corporate margins and then consumers). If it costs, stocks will react, and not well. Adding to the situation was a pair of announcements on the last day of the month. Trump said he would impose a 5% tariff on all Mexican imports to the U.S. starting June 10, 2019, until illegal migrants coming from Mexico into the U.S. were stopped, adding that the tariff rate would increase if the situation did not improve (10 days to negotiate). China said it was creating a list of "unreliable" foreign entities that harm Chinese businesses.

IPOs also took to the stage, but more as a side show, with some of them also taking a ride south; Uber (UBER) went public at USD 45 and hasn't seen that price since, trading at a low of USD 36.08 and closing at USD 40.41, with last month's USD 72 Lyft (LYFT) IPO closing at USD 57.62. However, there was meat in Beyond Meat's (BYND) USD 25 IPO, as it closed at USD 104.12. Global interest rates were also in the news, as they declined. The German 10-year traded at a historical low (-0.21%), while the 10-year U.S. Treasury Bond traded as low as 2.12%, closing at 2.13%, a level not seen since September 2017; it closed April 2019 at 2.51% and October 2018 at 3.16%. Oil closed at USD 53.36, down from April's USD 63.38 close (USD 45.81 year-end 2018).

Historically, the month of May posts gains 58.2% of the time, with an average gain of 3.15% for the up months and a 4.63% average decrease for the down months, with an overall average decline of 0.10%. The forward June month posts gains 54.9% of the time, with an average gain of 3.86% for the up months and a 4.37% average decrease for the down months, with an overall average gain of 0.69%.

The S&P 500 ended April at a closing high, then headed south, as "sell in May and go away" came back to ring true, with the index posting its worst May return (-6.58%) since 2010 (-8.20%). The decline was broad (107 issues up, 397 down), as investors reassessed the trade and tariffs issues, with corporate guidance adding its potential impact. The S&P 500 closed at 2,752.06, down 6.58% (-6.35% with dividends) from last month's 2,945.83 close, when it was up 3.93% (4.05%). Year-to-date, the S&P 500 was up 9.78% (10.74% with dividends). For the one-year period, the index fell from the double-digit category to be up 1.73% (3.78% with dividends). The Dow? closed at 24,815.04, down 6.69% (-6.32% with dividends) from last month's 26,592.91, when it was up 2.56% (2.66%). Year-todate, The Dow was up 6.38% (7.54%), and the one-year return was 1.65% (4.05%). The bull market run (now well into its 11th year, as I am in my 43rd at S&P), has posted a 307% (14.71% annualized) gain and was up 404% (17.14%) with dividends.

Bitcoin closed at USD 8,534, up from last month's USD 5,337, trading as high as USD 9,066 and as low as USD 5,348 (USD 3,747 at year-end 2018, USD 13,850 at year-end 2017, and USD 968 at yearend 2016). The S&P 500 target price was 3,158 (14.7% from here; 3,172 last month), and The Dow target price was 28,420 (14.5% from here; 28,610 last month).

Trump's planned nominee to the Federal Reserve Board, Stephen Moore, became the second person to withdraw his name from consideration; Herman Cain withdrew his name on April 22, 2019 (there are currently two vacancies on the board). The House of Representatives held hearings on "Medicare for All," which ended with more of a political stage for viewpoints, as the U.S. Justice Department (separately) started action (via a suit) to have the Affordable Care Act declared unconstitutional.

The Congress-versus-Trump battle continued and escalated. The (Democrat-controlled) House Judiciary Committee voted to hold Attorney General Barr in contempt of Congress for not turning over the full Mueller report, while Trump claimed executive privilege to prevent Treasury Secretary Mnuchin from releasing Trump's taxes to the House Ways and Means Committee. Meanwhile, the (Republican-

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controlled) Senate subpoenaed Trump's son, Don Jr. To date, the actions have had a limited impact on trading, but as the conflicts grow, so does the potential for a market impact.

Trump restricted (via being added to a trade blacklist) Chinese communication services issue Huawei Technologies (inhibiting its quest for 5G), but later in the week eased the restrictions for 90 days to permit maintenance and supply lines to be redirected. Trump also delayed tariffs on autos and auto parts for six months.

The U.S. came to an agreement with Canada and Mexico to end U.S. tariffs on steel and aluminum, as well as retaliatory actions, permitting the proposed USMCA trade deal to proceed. Trump said he would spend USD 16 billion to counter the impact of the Chinese agricultural trade issue, with most of it going directly to U.S. farmers. Reports said Trump was preparing an executive order to require disclosure of health care costs, with the specifics not yet known. Trump went to Japan over the U.S. Memorial Day weekend and met with Japanese Prime Minister Abe; the meeting was cordial and uneventful, as another trade front conflict was averted (or postponed). Trump said he would impose a 5% tariff on all Mexican imports into the U.S. starting June 10, 2019, until illegal migrants coming from Mexico into the U.S. are stopped; Trump added that the rate could increase if the situation did not improve. Reports said China was preparing plans to restrict exports of rare earth minerals to the U.S., as China said it was creating a list of "unreliable" foreign entities that harm Chinese businesses.

The FOMC met and left its interest rates unchanged (2.25%-2.5%), noting weaker-than-expected inflation and a strong labor market. The Bank of England met and held its interest rates unchanged (0.75%), as it increased its 2019 UK growth rate to 1.5% from the previously expected 1.2%. New Zealand cut its policy rate by 0.25% to a new low of 1.5% (the prior cut was in November 2016, from 2.00% down to 1.75%). The Bank of Australia kept its policy rate unchanged, at 1.5%. The bank also took responsibility for the typo on the AUD 50 banknote (184 million printed since 2018), which misspelled "responsibility" as "responsibilty" (three times). The FOMC minutes from its May 1, 2019, meeting showed its intent to remain patient on interest rate changes. However, since then, the concern over trade and tariffs has increased, which many felt was starting to affect their views.

With 97% of the market value reported for Q1 2019, 72.9% of issues were beating their reduced estimates (reduced 7.1% from the end of 2018), as 357 of the 490 issues beat their operating earnings estimates, with 278 of the 487 issues (57.2%) beating on sales. At this point, Q1 2019 is expected to post an 8.9% increase over Q4 2018 and a 4.4% gain over Q1 2018, although it would still be 7.8% below the record Q3 2018. For 2019, the estimate has declined 3.7% from the December 2018 estimate, and it is projected to show a 9.1% gain over 2018. For 2020, estimates show an expected 12.0% gain over 2019 and a 22.2% gain over 2018 (2020 estimates appear to still need the "gift of time" to mature, as do the events affecting them). Sales were posting a 2.3% decline from Q4 2018, which is typical, as the year-over-year change was a 5.8% gain. The tailwind from buybacks affecting issue-level earnings (and therefore the price) jumped in Q1 2019, as the cumulative impact of the record buybacks resulted in 67.8% of the issues reported showing a decrease in shares used for EPS year-over-year, with 24.9% of the issues having at least a 4% year-over-year tailwind due to lower shares.

Electric car issue Tesla (TSLA) said it raised USD 2.3 billion via stock and bond sales to support its cash needs. A U.S. jury found consumer health and crop services issue Bayer's (BAYRY) Monsanto (acquired in September 2016) liable for causing cancer in a couple who used its Roundup weed killer, and it ordered the company to pay them USD 2 billion (meanwhile there are thousands of other cases

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pending); the company said it would appeal. A U.S. federal judge ruled that digital communications equipment maker Qualcomm (QCOM) charged unreasonably high royalties for its patents, ordering the company to renegotiate licensing agreements with customers and adding that it could not sign exclusive supply agreements with smartphone makers, such as Apple (note last month Apple and Qualcomm agreed to continue paying licensing fees). S&P Dow Jones Indices announced that it would admit agricultural products maker Corteva (CTVA) to the S&P 500 prior to the opening of business on June 3, 2019, and remove Fluor (FLR) prior to the opening on June 4. Corteva is being spun off by DowDuPont (DWDP). After the spin-off, DowDuPont will change its name to DuPont de Nemours (the ticker will change to DD). Social media issue Facebook (FB) said it stopped paying sales commissions for political ads (unfortunately that won't stop the ads, or calls). Unrelated, a report said web-based retailer (and expanding business venture company) Amazon (AMZN) said it is developing a wearable device that can recognize emotions (hopefully it can measure my reaction to any change in political ads). A report determined that over 7,150 retail store closings have been announced YTD, with 2,726 openings announced; the net 4,424 YTD decline compared with 2018's 5,524 net closings. In a sign of changing online shopping habits (and its importance in business operations), package delivery issue FedEx (FDX; down 1.2% for the week) said it would start to make deliveries seven days a week.

The 10-year U.S. Treasury Bond closed the month at 2.13%, down from last month's 2.50% (2.69% for year-end 2018, 2.41% for 2017, and 2.45% for 2016). The pound closed down at 1.2633 from 1.3038 (1.2754 for year-end 2018, 1.3498 for 2017, and 1.2345 for 2016); the euro was down at 1.1170 from last month's 1.1216 (1.1461, 1.2000, 1.0520); the yen closed at 108.23 from last month's 111.42 (109.58, 112.68, 117.00), and the yuan closed at 6.9065 from last month's 6.7348 (6.8785, 6.5030, 6.9448). Oil decreased to close at USD 53.36 from last month's USD 63.38 (USD 45.81 at year-end 2018, USD 60.09 for 2017, and USD 53.89 for 2016). U.S. gasoline pump prices (EIA, all grades) decreased, closing the month at USD 2.909 from last month's USD 2.972 per gallon (USD 2.358, USD 2.589, USD 2.364). Gold was up, closing at USD 1,310.20 from last month's USD 1,282.70 (USD 1,284.70, USD 1,305.00 for year-end 2017, and USD 1,152.00 for year-end 2016). VIX closed at 18.71, trading as high as 23.38 and as low as 12.74, up from 13.12 last month (25.42 at year-end 2018, 11.05 at year-end 2017, and 14.04 at year-end 2016).

INDEX REVIEW

S&P 500

The S&P 500 closed at 2,752.06, down 6.58% (-6.35% with dividends) from last month's 2,945.83 close, when it was up 3.93% (4.05%). Year-to-date, the S&P 500 was up 9.78% (10.74% with dividends). For the one-year period, the index fell from the double-digit category to be up 1.73% (3.78% with dividends). Intraday volatility (daily high/low) increased to 1.00% from last month's 0.56%, and the YTD return was 0.91% (0.86% last month); 2018 was 1.21% and 2017 was 0.51% (which was the low since 1962; the average was 1.43%). S&P 500 trading increased 5% (adjusted for trading days) over the last month, after the prior month's 11% decrease; year-over-year, May was up 1%, as the YTD trading volume was 1% lower than the similar period for last year. Daily 1% moves increased, as 4 of the 22 days moved at least 1% (all down, with one down more than 2%), compared with 1 of the 21 days in April (up); year-to-date, 16 of 104 days moved at least 1% (9 up and 7 down).

As for June, at this point the month may as well be renamed Negotiations-R-Us, as the political calendar appears to be in charge. A change in management is scheduled for the UK, with Prime

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Minister Theresa May resigning as party head on June 7, 2019, and the party picking her replacement; related, the EU says "a deal is a deal," and will not renegotiate--take it or leave it--to which the term "Brexit with No Deal" has emerged in UK politics. Then the date for the new 5% tariffs on Mexican imports arrives (June 10, 2019). Trump and Chinese President Xi Jinping are scheduled to meet at the G20 in Osaka, Japan, on June 28-29, 2019, as public negotiations hopefully turn into a positive, private one. In the U.S., Congressional action versus executive refusals will lead to negotiation if the TrumpPelosi dispute becomes a war, while at Broad and Wall investors will need to adjust to a new trade and tariff perceived reality, with the Fed potentially having to set up for its own adjustment.

Sector variance increased, as only 1 of the 11 sectors gained, down from 8 gainers last month and 9 the month before that (March). The spread between the best (Real Estate, 0.90%) and worst (Energy, -11.71%) sectors for the month was 12.61%, up from last month's 11.58% and 7.50% the month before that; the YTD spread was 16.43% (up from last month's 23.75%; full-year 2018 was 25.19%). For the month, Real Estate did the best and was the only positive sector, adding 0.90%, as risk was on and its domestic makeup helped; the sector was up 17.01% YTD, also the best of the any sector. Utilities was next best, down 1.28%, as risk and its domestic makeup also helped, as well as lowering interest rates, since Utilities issues tend to be large borrowers; the sector was up 9.43% YTD (on par with the overall index). Health Care also outperformed, although it declined 2.55% and was up 0.58% YTD, the worst sector in the index. Energy did the worst, as oil declined (mostly due to oversupply), falling 11.71% for the month and up 1.89% YTD. Information Technology declined 8.91%, but it remained up 15.65% YTD and up 57.41% from the U.S. November 2016 election. Consumer Discretionary declined 7.73% and was up 12.42% YTD, as Consumer Staples was down 4.00% and up 9.21% YTD.

Breadth decreased for the month, as 107 issues gained (an average 3.38% each), down from 359 last month and down from 305 the month before that; 6 issues gained at least 10% (15.00%), compared with 67 last month (20 the month before that), with no issues up at least 25% (2 last month). On the down side, 396 issues declined (an average loss of 9.90%), up from 145 last month and up from 200 the month before that, as 172 issues declined at least 10% (average -16.19%), down from last month's 11 issues (22 the month before that), and 13 were down at least 25% (1 last month). Year-to-date, breadth declined but stayed strongly positive; 383 (458 last month) issues were up (average 16.45%), as 261 (371) were up at least 10% and 80 (152) were up at least 25%, while 118 (44) were down, with 47 (18) down at least 10% and 13 (one) down at least 25%.

The Dow

If you sold in May (early) and went away, you were a winner, otherwise it was a bad month for The Dow, as well as any non-short seller. The Dow continued to decline, posting six consecutive weeks of declines (-6.57%), an event not seen since June 2011 (-4.43%), with the last run of seven down weeks in July 2001 (-9.28%).

For the month of May, The Dow closed at 24,815.04, down 6.69% for the month (-6.32% with dividends), from last month's 26,592.91 close (2.56%, 2.66% with dividends), as the three-month return was -4.25% (-3.66%). The Dow was up 6.38% YTD (7.54%), and the one-year return was 1.64% (4.05%). The Dow closed 7.50% off its Oct. 3, 2018, closing high (26,828.39) and 7.93% off its intraday high (26,951.81, set the same day), as it was three-quarters of the way to a correction. Longer-term numbers reflect the bull run; the two-year return was 18.12%, the three-year was 37.78%, and the fiveyear was 48.44%--all of which beat the S&P 500.

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Issues continued to vary, with trading still centered on trade and to some extent protecting (prior) profits, however, the trend was down. The spread between the best and worst issue declined to 21.32%, after last month's jump to 38.69% from 23.01%. For the month, 6 of the 30 issues gained, an average of 1.40% each, compared with last month's 19 gainers, with an average increase of 7.05% (21 were up the month before that). No issue gained at least 10%, compared with four last month. On the popular down side, 24 issues declined, with an average loss of 8.54%, compared with 11 last month (9 the month before that), as 9 issues fell at least 10%, with an average fall of 13.41%, compared with one last month (-15.33%). Year-to-date, breadth declined but remained positive, as 22 of the 30 issues were up, an average gain of 11.64%, down from 25 last month, when their average gain was 17.32% (25 were up the month before that). There were 12 issues that gained at least 10%, up an average 16.82%, compared with 19 last month (up 20.88%, with 16 the month before that), as none were up at least 25%, compared with four last month. On the down side, seven issues fell, an average of -9.57%, up from four last month (-8.89%), as two were down at least 10% (-21.98%; compared to one last month), while one issue was down at least 25%, at -27.79%.

Trade dominated the news, as the previously beaten-down Health Care issues did the best. UnitedHealth Group (UNH) did the best, up 3.75%, but remained down 2.94% YTD, as Pfizer (PFE) was next, up 2.24% and also down YTD, at -3.88%. Merck (MRK) was fourth best, up 0.64% for the month and up 3.66% YTD. Insurance issue Travelers (TRV) added 1.27% (third best) and was up 21.56% YTD, as more traditional Financials issues did poorly. JPMorgan Chase (JPM) fell 8.69% and was up 8.54% YTD, as Goldman Sachs (GS) declined 11.38% for the month and was up 9.25% YTD. Industrials did the worst, as 3M (MMM) fell 15.70% (off 16.16% YTD), Caterpillar (CAT) was off 14.70% (-5.71%), and United Technology (UTX) fell 11.44% (up 18.61% YTD). Oil declined, as Energy issue Exxon Mobile (XOM) lost 11.85% (up 3.78% YTD), and Chevron (CVX) fell 5.17% (up 4.65% YTD).

S&P MidCap 400

The S&P MidCap 400 posted a broad 8.13% decline in May, after last month's 3.93% gain (-0.74% the month before that). For the three-month period, the group was down 5.23% (up 7.37% for the threemonth period last month), as the YTD return was 8.87% (up 18.50% YTD in April), with the one-year performance down 6.98%. All four performance numbers had the mid-cap index behind the large caps but ahead of the small caps. Longer term, the two-year gain was 5.16% (13.73% last month), with the three-year return at 20.53% (34.83%) and the 50-year return at 31.39% (45.34%).

All 11 sectors in the S&P MidCap 400 declined for the month, compared with 9 gainers last month and 6 the month before that. Sector spreads increased, as the difference between the best and worst group increased to 16.43% from last month's 11.39% and 10.33% the month before that; the YTD spread increased to 20.38% from last month's 19.34% and the prior month's 12.71%. The one-year spread again jumped, as it was up to 64.34% (Communication Services was up 22.12% and Energy was down 42.23%) from last month's 46.38%, which had jumped from the prior month's 29.55% (2018 was 36.14%).

For the month, Utilities did the best, as the domestic makeup of its issues protected them from trade concerns and lower interest rates would reduce their costs (they are heavy debt users). However, the sector still posted a loss (as sentiment was down, and risk up), falling 1.51% for the month (a relative winner); it was up 8.17% YTD, slightly subpar to the index. Real Estate also outperformed (relatively), declining 2.89% and up 9.54% YTD, slightly outperforming the index. Energy did the worst, off 17.94%, as oil prices declined; the sector fell into the red YTD, down 5.40%, and the group was down 42.23%

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for the one-year period. Materials also declined in the double digits, off 10.88%, but it was up 2.75% YTD. Information Technology lost 10.99% for the month and was up 14.98% YTD, the best sector in the index for that time period. Consumer groups did slightly worse than the average; Consumer Discretionary fell 8.41% for the month and was up 7.23% YTD, and Consumer Staples was down 9.52% and up 0.24% YTD.

Breadth turned strongly negative, as 61 issues gained an average of 3.51% each, down from last month's 289 gainers (up an average of 7.51% each, with 177 gainers the month before that), while 339 issues declined, an average loss of 11.75%, up from last month's 111 decliners (average loss of 5.71%); 222 issues were down the month before that. Gains of at least 10% were few, with 2 issues (average 11.71%) doing so, down from last month's 71 (20 the month before that), as 175 issues declined at least 10%, with an average loss of 17.71%, up from last month's 17 (45 the month before that). No issues saw significant gains of at least 25%, down from 3 the month before, as 22 issues fell at least 25% (average 30.90%), up from 3 the month before.

Year-to-date, breadth remained positive, as 277 (352 last month) issues gained (average 17.10%), and 122 (47) were down (-13.41%), with 183 (286) up at least 10% (23.46%) and 56 (22 last month) down at least 10% (-23.88%). Gains of at least 25% were reported for 62 (130) issues, up an average 37.18%, with 21 (5) reporting a loss of at least 25% (-36.82%).

S&P SmallCap 600

Bigger was better for May, which left the S&P SmallCap 600 on the short side. Part of the reasoning was that larger-cap issues were better suited to ride out any turbulence, as they had better resources for financing, with any pullback in their products quickly affecting their suppliers. The S&P SmallCap 600 declined 8.85% for the month, after last month's 3.81% gain, as it continued to trail the other headline indices. The three-month return was 8.73%, the YTD return was also positive, at 5.18%, and the one-year return was down 11.79%, as it also posted the lowest returns among the other core indices for those time periods. Longer term, the S&P SmallCap 600's five-year return of 36.10% was better than the S&P MidCap 400's, but it trailed the large-cap indices; the small-cap index's gain for the century-to-date (Y2K) was 349% versus 43% for the S&P 500.

For the month, all 11 sectors declined, compared with 9 gainers last month and 4 the month before that. Sector variance jumped; the difference between the best and worst sector was 20.41%, up from last month's 8.52% and the 11.70% posted the month before that. Year-to-date, the variance declined to 14.79% from last month's 17.69%. For the one-year period, the difference was 55.61%, as Utilities was up 4.55% and Energy was down a devastating 51.06% (off 50.07% over the 10-year period and up 98.31% from Y2K).

For the month, Utilities did the best, off 1.29%, as it was considered a winner, with the sector up 7.75% YTD. Real Estate also did better than most, falling 3.37% and up 11.03% YTD--the best-performing sector in the index for that time period. Energy did the worst, declining over one-fifth, -21.70%, as it wiped out its 2019 gains to end in the red, off 3.76% YTD. Materials lost 16.17% for the month, remaining positive YTD, up 1.39%. Information Technology declined 10.88% and remained up 10.47% YTD. Consumer Discretionary lost 11.26%, as it posted a 1.04% YTD gain, with Consumer Staples down 7.72% and up 1.83% YTD. Health Care fell 6.00%, as it ticked into the red YTD, off 0.11%.

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For the month, breadth turned strongly negative, as 104 issues gained, with an average gain of 7.54%, down from last month's 417 gainers (and 197 the month before that). On the down side, 494 issues fell (an average loss of 14.05%), up from last month's 182 (201 the month before that). Gains of at least 10% were posted by 26 issues (average 20.05%), compared with 113 last month, as 283 issues posted declines of at least 10% (average -20.63%), compared with 43 last month. Year-to-date, 342 (483 last month) were up (22.16%) and 256 (117) were down (-17.60%), while 224 (381) posted gains of at least 10% (31.19%) and 151 (58) decreased at least 10% (-26.68%). Extreme changes of at least 25% YTD were posted by 167 issues, with 107 up at least 25% (average 47.57%) and 60 down (-41.13%).

S&P Global BMI

Global markets uniformly turned around from last month, as they moved broadly lower and posted a 6.20% decline, after April's broad gain of 3.11% (March was up 0.78%). The U.S. also reversed and underperformed global markets in May; absent the U.S.'s 6.66% loss, non-U.S. markets were down 5.66%. For the three-month period, markets were down 2.53%, and excluding the U.S.'s 1.80% decline, they were down 3.35%. Year-to-date, global markets were up 7.96%, and absent the U.S.'s 10.02% gain, they were up 5.68%. Over the one-year period, global markets were down 4.35%, and absent the U.S.'s 0.52% gain, they were off 9.48%. Longer-term yardsticks continued to show the U.S. outperformance pattern, as the two-year global return was 5.63% with the U.S. (13.54%) and -2.35% without it, and the three-year return was up 23.33%, but absent the U.S. (33.65%), it was up 12.97%.

For May, the S&P Global BMI decreased USD 3,400 billion (up USD 1,637 billion last month). NonU.S. markets decreased USD 1,447 billion for the month (up USD 531 billion last month), as U.S. markets decreased USD 1,953 billion (up USD 1,106 billion last month).

Sector variance decreased, as none of the 11 sectors increased (8 of 11 gained last month). The spread between the best (Real Estate, -1.03%) and worst (Information Technology, -8.59%) sectors for the month was 7.57% (the one-year average was 7.34%), down from last month's 8.45%; year-to-date, the spread was 12.51% (20.13% last month).

Emerging markets posted a 6.26% loss after last month's 1.98% gain, while the three-month loss was 2.92%, the YTD return was 5.21%, and the one-year period was down 8.77%. The two-year return was up 2.01%, and the three-year return was 21.72%. For May, 5 of the 23 markets were up, compared with last month's 15. Greece did the best, up 4.90% for the month and up 27.80% YTD, followed by Russia, which gained 3.13% and was up 20.79% YTD. China did the worst, as it fell 12.85% in May and was up 4.07% YTD, with Columbia down 9.23% and up 9.34% YTD.

Developed markets posted a consolidated 6.19% decline for the month, while the return excluding the U.S. was -5.48%. The three-month loss was 2.48% (-3.46% excluding the U.S), the YTD return was up 8.29% (5.82% excluding the U.S.), and the one-year period was down 3.84% (down 9.69% excluding the U.S.) The two-year return was 6.06%, but -3.47% excluding the U.S., and the three-year return was 23.54% and 10.84% excluding the U.S.

For May, none of the 25 markets were up, compared with last month's 24. Australia did the best, down 0.24% for the month and up 11.80% YTD, followed by Switzerland, which lost 0.91% and was up 11.82%. Luxembourg did the worst, as it fell 18.40% and was down 17.64% YTD, with Austria down 10.70% and up 5.32% YTD. Of note, Canada fell 4.05% (up 12.92% YTD), Germany was down 8.01% (4.60%), Japan was off 4.15% (2.51%), and the UK fell 6.74% (5.95%).

MARKET ATTRIBUTES

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