After a strong January with returns of more than 5 percent, the S&P 500 struggled to gain in February. Despite a sharp, but brief setback, the index rose for the fourth consecutive month in a row, returning 1.36 percent, and finishing just short of its record close of 1,565, a level that was reached briefly in 2007. Investors were encouraged after Ben Bernanke stood behind the central bank’s low interest rate policy and after a positive revision to fourth-quarter gross domestic product from an earlier estimate showing contraction.
Record joblessness in the euro zone and political turmoil in Italy put downward pressure on European stocks. The MSCI European Index lost 2.77% as worries increased that Europe’s debt problems could once again destabilize the region’s economy. The MSCI Pacific Index gained 2.54% as Japan regained its upward momentum. The MSCI Emerging Markets Index lost 1.26% leaving year-to-date returns for the index slightly positive.
The DJ AIG Index of 20 commodities lost 4.09% in February pushing year-to-date returns for the basket to negative1.79 percent. Gold fell to $1,579 per ounce, its lowest level since last August and its fifth consecutive monthly decline. Barclays US Aggregate Bond Index returned 0.45%, while Barclays U.S. Corporate High Yield Index returned 0.51%. S&P’s National AMT Free Municipal Bond Index returned 0.37%. Barclays’s US TIP index returned 0.03% and Barclay’s Long-Term Treasury Bond Index returned 1.26%. The average spread for BBB-rated bonds widened while higher-quality A- and AA-rated bonds tightened.
Words of wisdom: A well-diversified portfolio based on a sound investment philosophy and tailored to one’s personal risk tolerance, time horizon, and investment objectives combined with periodic rebalancing are the keys to long-term investment success.