The major U.S. stock indices produced strong returns and record highs during the third quarter. The broadest U.S. equity benchmarks generated 10% year-to-date returns through September while foreign benchmarks were negative.

However, October has been different. During the first three weeks of October, the market declined approximately 11% on concerns about rising interest rates and economic weakness abroad. Sectors with the greatest momentum during the summer corrected the most. Volatility and anxiety spiked. We see this corrective action as a healthy development that will squeeze out excesses and exuberance. The overall outlook remains constructive with solid fundamentals. However, there is growing debate on the peaking of growth rates and impact of higher interest rates on valuations. A summary of index returns for the year-to-date ending September 30, 2018 is as follows:

Dow Jones Industrials +8.8%
Russell 2500 +10.4%
S&P 500 +10.6%
NASDAQ Composite +17.5%
Wilshire 5000 +10.7%

Investment Perspective Econ & Investment Outlook October 2018 (pdf)