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Why US and global equities have performed well in 2014

Russ Koesterich, CFA of BlackRock

Volatility and your investments: Is a September swoon ahead? (Part 1 of 4)

Despite stocks’ strong recent performance, investors may want to exercise a bit of caution going into the fall. Russ gives two reasons why.

Strong economic data, continued mergers and acquisitions activity and stubbornly low long-term rates helped stocks advance again last week, with U.S. and global equities both finishing August significantly higher.

Market Realist – The previous graph shows how U.S. equities, as tracked by the iShares Core S&P 500 (IVV), and global equities, as tracked by the iShares MSCI ACWI ETF (ACWI), have been steadily increasing this year.

The S&P 500 registered its highest-ever close of 2,000.02 on August 27, 2014, and the Dow Jones Industrial Average Index (or DJIA) touched a record high of 17,138 on July 16, 2014.

U.S. stocks continued to register weekly gains in the week ended August 29, 2014, with the S&P 500 (SPY) up 0.55% at 2,003, the DJIA (DIA) up 0.35% at 17,098, and the NASDAQ (QQQ) up 1.06% at 4,580.

According to MSCI, emerging market (EEM) equities have also given good returns of almost 15% in the six months ending August 20, 2014, compared to 6% from MSCI World in the same period.

Chinese (FXI) and Indian (EPI) equities have been increasing steadily. According to estimates by Bloomberg, the Shanghai Composite Index has shored up by almost 13% since March on the economy’s improving prospects. Indian markets have been registering record highs this year, with the Sensex touching 27,082.85 and the Nifty logging a lifetime high of 8,101.95 on September 1, 2014.

Read on to the next part of this series to see why you need to exercise caution going forward.

Continue to Part 2

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