Investor confidence rebounded in the third quarter immediately following Brexit, driving the S&P 500 to new highs. Comments by the Fed in early September stirred up some volatility and share prices slipped backwards. Not all gains were lost, however, as the S&P 500 delivered a 3.9% total return for the quarter. Cyclical sectors rallied most, with Technology stocks gaining 12.9%, largely driven by earnings results. An improving economic outlook drove Industrials and Financials up 4.6% and 4.1%, respectively. Overvalued defensive sectors pulled back, with Utilities and Telecom each dropping nearly 6% for the quarter. Domestically, small cap stocks outperformed large caps, with the Russell 2000 climbing 9%.
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