For the third consecutive summer selling in May and going away would have been folly. US equities melted up between July and September amid a strong economy and overcoming any concerns over trade. The S&P 500 Index hit new all-time highs as it gained 7.71% in the third quarter (Q3), well ahead of the Russell 2000 small-cap index, which gained 3.58% over the same period. The latter is still outperforming on a year-to-date basis with a 11.51% return, compared to 10.56% for the S&P 500.
However, the summer bounce in the US did not extend abroad. Developed economies across the world remained in a soft patch, in sharp contrast to the US economy. The MSCI EAFE Index (net) gained only 1.35% in Q3, leaving its year-to-date return in negative territory at -1.43%.