Three-quarters of the way through 2013, the stock market today has performed admirably. The average diversified U.S. stock fund soared 7.7% from July through September.
The third-quarter gain, the best since the first quarter, brings 2013’s average gain to 21.6% vs. 20.5% for the S&P 500 index. If the year were to end here, it would be the best one since 2009.
Stock Market Today
- Average stock gains 21.6%.
- Emerging markets sell off.
- Influenced by news of the day.
Small company growth funds jumped 12.8% the third quarter, bringing the 2013 gain to 32.2%. The biggest improvement through the third-quarter 2013 happened with precious metals funds, up 11.4%, thanks to a big rebound in gold prices.
Health and biotechnology funds were up 13.9% for the third quarter and 38.3% for the year.
Global science and technology funds rose 13.4% for the quarter and 22.5% for the year. The top fund for the quarter was Direxion China Bull 3X fund, up 93.6%. It uses leverage to capture the Chinese market’s gains and losses.
Some international funds also fared well. European funds gained 13.1% for the quarter, and international large-cap core funds — your basic diversified large-company international fund — jumped 11.6%.
Emerging markets funds, however, gained 5.5% for the quarter, and are still down 2.2% for 2013. India funds fell 6.5%, and real estate funds lost 1.7%.
Stock Market Today: Looking Ahead
However, the stock market is being influenced by a number of issues: a shutdown by the federal government, a threat by the Fed to reduce economic stimulation, unrest in the Middle East and a month—October—that historically has a bad reputation.
Historically, stocks have managed to advance the vast majority of the time (10 out of 11 occurrences) in the two weeks following a government shutdown. In addition, a Bloomberg report stated that since 1976, the S&P has risen 11% on average in the 12 months post-shutdown.
News of the day is likely to dominate trading in the coming days and weeks so should new tensions break out in the Middle East, investors may take profits and put new money to work in gold or bonds, both safe havens.
If Mauricio Macri's reforms continue to work their economic magic and draw in big-name investors, several Argentine stocks will have the last laugh.
Earnings season is officially here in earnest.
The biotech sector has had a rough go of it since last July, as evidenced by the XBI fund, which lost over half of its value between July and February.
The coal industry was dealt another lump last week when Peabody Energy filed for bankruptcy. Still, one coal company could be a compelling deep-value play.
The direst geopolitical conditions invariably generate the greatest media noise, but they also produce investing opportunities for the intrepid contrarian.