Monthly Market Monitor: February 2013

U.S. stocks extended year-to-date gains into a second month, as investors remained encouraged over better-than-expected corporate earnings despite a slowdown in global growth. February was marked by inconclusive election results in Italy that reignited European debt crisis concerns and U.S. political gridlock that ushered in the so-called “sequestration” federal spending cuts. Slated to begin after midnight March 1st, the across-the-board cuts will total $1.2 trillion over nine years, with $85B over the remaining seven months of this fiscal year. After reaching a fresh five-year high of 1,530 on February 19th, the S&P 500 returned 1.4% on the month, including dividends, while the Dow Jones Industrial Average outperformed with a 1.8% return. The technology-focused NASDAQ Composite lagged with a 0.8% gain.

Small-cap stocks underperformed large-caps as the Russell 2000, a proxy for small-cap equities, returned 1.1% in February. Value stocks edged out their growth counterparts as the Russell 1000 Value Index gained 1.4% last month whereas the Russell 1000 Growth Index returned 1.2%. In a stark turnaround, commodities, as measured by the S&P GSCI Index, fell 4.4% last month after gaining 4.5% in January. In particular, gold futures dropped 5% in February and nearly 6% YTD. Silver fared even worse, falling 9.3% on the month. Crude oil futures retreated 6% in February, the first monthly decline since October.

Nine of the ten S&P 500 sector groups advanced on the month, led by gains in Consumer Staples (+3.2%), Telecom (+2.6%) and Industrials (+2.5%). Energy (+0.4%) gained the least, while Materials fell 1.5%. For the year, all ten S&P sectors are in positive territory with Consumer Staples (+9.2%) and Healthcare (+8.8%) the top performers. The Technology sector has gained the least so far this year, up 2.1%.

Overseas developed markets underperformed the U.S. as the MSCI EAFE Index fell 0.9% in February. China’s Shanghai Composite fell 0.8% for the month, its first monthly decline since November. Emerging markets also underperformed in February, as the MSCI Emerging Markets Index fell 1.2%, its worst month since May.

U.S. Treasury 10-year note yields seesawed during the month ending at 1.88%, over 11 basis points lower than January’s month end. Treasuries, as measured by the Barclays U.S. Government Bond Index, reversed their January losses, returning 0.5% in February. U.S. investment grade bonds also gained 0.5% in February, as measured by the Barclays U.S. Aggregate Bond Index. Municipal bonds, as measured by the Barclays Municipals Index, returned 0.3% in February. Non-investment-grade corporate bonds posted a 0.5% monthly return, as measured by the Barclays U.S. Corporate High Yield Index.

This information is compiled by Cetera Financial Group. No independent analysis has been performed and the material should not be construed as investment advice. Investment decisions should not be based on this material since the information contained here is a singular update, and prudent investment decisions require the analysis of a much broader collection of facts and context. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

Securities and insurance products are offered by Cetera Investment Services LLC (doing insurance business in CA as CFGIS Insurance Agency), member FINRA/SIPC. Cetera Investment Services is not affiliated with the financial institution where investment services are offered. Investment products are: * Not FDIC/NCUSIF insured * May lose value * Not financial institution guaranteed * Not a deposit * Not insured by any federal government agency.

All economic and performance information is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot directly invest in unmanaged indices. Please consult your financial advisor for more information.

Additional risks are associated with international investing, such as currency fluctuations, political and economic instability, and differences in accounting standards.