SOURCE: Russell Investments

Russell Investments

August 01, 2012 11:17 ET

Russell Indexes: U.S. Equity Markets Have Had Mixed Performance After FOMC Announcements on Quantitative Easing

SEATTLE, WA--(Marketwire - Aug 1, 2012) - The U.S. equity markets have had mixed performance after announcements of the first two rounds of quantitative easing, following Federal Open Market Committee, or FOMC, meetings.

Quantitative easing is a government monetary policy used to buy government or other securities from the market, increasing the money supply in an effort to promote increased lending and liquidity and potentially stimulate the economy. The first round of U.S. quantitative easing, referred to as "QE1," was announced by the Federal Reserve on November 25th, 2008 and the second round of quantitative easing, referred to as "QE2," was announced on November 3rd, 2010. The U.S. markets, as reflected in the Russell Indexes, had mixed reactions:

  • After QE1 was announced on November 25th, 2008, the Russell 1000® Index of U.S. large cap stocks was initially positive, returning 2.7% for the month after the announcement. The U.S. markets turned negative in the following months, however, as illustrated by a (-10.4%) return for the Russell 1000 for the three months after the announcement. This trend was more pronounced among U.S. small cap stocks, with the Russell 2000® Index up 7.8% in the month after the QE1 announcement, but down (-10.9%) for three months after the announcement.

  • After QE2 was announced on November 3rd, 2010, the Russell 1000® Index of U.S. large cap stocks was initially positive, returning 2.8% for the month after the announcement. Yet unlike the first round of quantitative easing in 2008, the U.S. markets stayed positive in the following months, as illustrated by a 10.0% return for the Russell 1000 for the three months after the announcement. Again, this trend was even more pronounced among U.S. small cap stocks, with the Russell 2000® Index up 5.9% in the month following the QE1 announcement and 12.0% for three months following the announcement.
 
 
Russell 1000® Index & Russell 2000® Index -Performance Following QE1 Announcement
Index / Sector 1 Month Return
 Nov 25th - Dec 26th 2008
2 Months Return
Nov 25th 2008-Jan 26th 2009
3 Months Return
 Nov 25th 2008-Feb 26th 2009
Russell 1000 Index 2.7% -1.0% -10.4%
Technology 4.1% 5.8% 0.3%
Financial Services 3.0% -19.1% -24.6%
Utilities 0.4% 2.2% -9.3%
Health Care 6.4% 7.3% -0.7%
Consumer Discretionary 7.7% 2.5% -7.2%
Consumer Staples 0.2% -0.7% -11.0%
Energy -4.8% -0.1% -11.7%
Materials & Processing 6.3% 1.5% -9.1%
Producer Durables 3.8% -3.9% -19.1%
       
Index / Sector 1 Month Return
 Nov 25th - Dec 26th 2008
2 Months Return
Nov 25th 2008-Jan 26th 2009
3 Months Return
 Nov 25th 2008-Feb 26th 2009
Russell 2000 Index 7.8% 1.9% -10.9%
Technology 5.0% 4.6% -3.4%
Financial Services 8.0% -6.7% -19.9%
Utilities 1.6% 0.2% -11.4%
Health Care 11.3% 8.3% -1.9%
Consumer Discretionary 13.5% 8.9% -1.2%
Consumer Staples 1.5% 0.3% -11.4%
Energy -6.5% -1.4% -22.0%
Materials & Processing 9.6% 2.7% -16.1%
Producer Durables 10.4% 3.7% -13.5%
 
 
Russell 1000® Index & Russell 2000® Index -Performance Following QE2 Announcement
Index / Sector 1 Month Return
 Nov 3rd - Dec 3rd 2010
2 Months Return
 Nov 3rd 2010-Jan 3rd 2011
3 Months Return
 Nov 3rd 2010-Feb 3rd 2011
Russell 1000 Index 2.8% 6.9% 10.0%
Technology 0.9% 3.9% 9.2%
Financial Services 2.6% 9.5% 11.8%
Utilities -0.8% 3.1% 3.1%
Health Care -0.8% 2.3% 3.8%
Consumer Discretionary 4.5% 6.4% 7.3%
Consumer Staples -0.1% 2.6% 1.1%
Energy 9.2% 14.7% 24.1%
Materials & Processing 5.7% 11.3% 14.0%
Producer Durables 4.7% 8.8% 13.8%
       
Index / Sector 1 Month Return
 Nov 3rd - Dec 3rd 2010
2 Months Return
 Nov 3rd 2010-Jan 3rd 2011
3 Months Return
 Nov 3rd 2010-Feb 3rd 2011
Russell 2000 Index 5.9% 11.9% 12.0%
Technology 6.4% 11.0% 15.6%
Financial Services 2.7% 10.0% 9.0%
Utilities 0.8% 4.7% 4.2%
Health Care 2.4% 11.8% 10.6%
Consumer Discretionary 9.0% 12.6% 9.0%
Consumer Staples 2.0% 7.5% 4.8%
Energy 15.6% 23.0% 29.5%
Materials & Processing 7.9% 15.0% 13.7%
Producer Durables 7.1% 12.4% 12.8%

Source: Russell Investments

The Russell Global Index includes more than 10,000 securities in 48 countries and covers 98% of the investable global market. All securities in the index are classified according to size, region, country and sector. Daily Returns for the main components are available here: http://www.russell.com/indexes/data/daily_total_returns_global.asp

Please note: Indexes are unmanaged and cannot be invested in directly. Returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment. Russell's publication of the Indexes or Index constituents in no way suggests or implies a representation or opinion by Russell as to the attractiveness of investing in a particular security. Inclusion of a security in an Index is not a promotion, sponsorship or endorsement of a security by Russell and Russell makes no representation, warranty or guarantee with respect to the performance of any security included in a Russell Index.

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