Stock Market Commentary -

Market valuations expanded in the third quarter, largely due to the Fed delaying the tapering of its bond purchase program. Among domestic equities, the S&P 500 rose 5.2%, outpaced by smaller stocks as the Russell 2000 gained 10.2%. Large growth overtook large value by a significant margin in the third quarter and small growth stocks continued to outperform small cap value. Defensive sectors trailed Cyclicals once again, and the best performing sectors were Materials and Industrials, up 10.1% and 9.1%, respectively.

As conditions stabilized across Europe, concerns abated and the MSCI Developed (EAFE) index jumped by 11.7%. Emerging markets, which had plummeted after the Fed's tapering announcement in the second quarter, sprang sharply upward in September generating a return of 5.8% for the quarter. The real estate sector continued to lose steam in the rising rate environment and the DJ Wilshire REIT Index fell 3.1%.