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November 2012 Recap
Hello, and welcome to the State Farm market recap audio broadcast. Each month, we offer a perspective on recent events impacting the financial markets in the U.S. and abroad.
This is the recap for the month of November 2012.
Equity markets edged higher in November despite the uncertainty of the U.S. Presidential election and the volatility brought on by the post-election fiscal cliff budget negotiations occurring within the U.S. Congress.
Now lets first review the U.S. equities markets.
In the U.S., stocks made modest advancements in November after overcoming another month of volatility. Post the Presidential election, the S&P 500 Index dropped nearly 4 percent before climbing its way back and ending the month in positive territory. During the month the U.S. Commerce Department announced that real gross domestic product (GDP) gained a moderate 2.7 percent in the third quarter which was the best increase in GDP in nearly three years. For the month, mid-cap stocks led all the major stock indices upward gaining 1.6 percent. Large cap stocks and small cap stocks also advanced for the month posting total returns of 0.6 percent and 0.5 percent, respectively. Year-to-date through November, large-cap stocks, as measured by the S&P 500 Index®, have returned 15.0 percent followed by mid-cap stocks, as measured by the Russell Mid-Cap Index® and small-cap stocks, as measured by the Russell Small-Cap Index® have posted total returns of 14.7 percent and 12.4 percent, respectively.
For the longer 5-year time period, U.S. stocks remain in positive territory led by mid-cap stocks posting positive returns of 3.0 percent, followed by small-cap stocks and large-cap stocks which have returned 2.8 percent and 0.4 percent, respectively.
Six of the ten sectors within the S&P 500 posted modest positive returns for the month with Materials and Consumer Staples leading the way posting returns of 1.5 percent and 1.4 percent, respectively. Utilities, the only sector in negative territory year-to-date, led the declining sectors lower for the month falling 5.0 percent. Over the longer-1-year period, six of the S&P 500 sectors have produced double-digit total returns led by Telecommunication Services, Health Care, and Consumer Discretionary posting returns of 20.0 percent, 19.3 percent, and 18.2 percent, respectively.
Lets now turn our attention to the foreign equities markets.
On a global basis, foreign equity markets started the month rather slow but ended strongly as investors became less concerned about the fiscal challenges in the U.S. and abroad and increased their holdings in riskier assets. Positive debt restructuring news from Spain and Greece helped ease economic concerns about the debt-burdened countries and moved the markets into positive territory for the month. The Morgan Stanley Capital International Europe, Australasia, and Far East Index advanced 2.4 percent for the month and extended its year-to-date total return to 13.7 percent.
Japanese stocks also posted a positive gain in November advancing 2.4 percent in U.S. dollar terms, as the countrys industrial output rose in October, up for the first time in four months. For the month, the Nikkei Average, the leading index of Japanese stocks, advanced 5.9 percent, its best monthly performance since February.
Lets now switch our focus to the U.S. fixed income markets.
In the U.S. fixed income markets, long-term government bond prices were mostly unchanged for the month as investors kept to the sidelines in the absence of progress on Congressional budget negotiations. For the month, the Barclays U.S. Aggregate Bond Index posted a monthly return of 0.2 percent. Over the longer 1-and 5-year time periods, bonds, as measured by the Barclays Aggregate Bond Index, have posted positive total returns of 5.5 percent and 6.0 percent, respectively.
Municipal bonds experienced a modest increase in November as demand continued to outpace supply. For the month as the Barclays Municipal Bond Index advanced 1.7 percent and extended its year-to-date return to 8.1 percent. Over the longer 1- and 5-year time periods, municipal bonds have posted positive returns of 10.2 percent and 6.2 percent, respectively.
U.S. Treasury prices moved higher in November pushing yields lower as investors remained concerned about the inability of lawmakers to compromise on the expiring tax cuts and spending measures that threaten to slow the U.S. economy. For the month, the yield on the benchmark 10-Year Treasury note closed at 1.62 percent down from Octobers 1.72 percent while the 30-Year Treasury Bond yield ended the month at 2.85 percent.
With that, we will conclude this broadcast. Thank you again for listening to the State Farm Market Recap. Please join us again next month for the latest market review.
As the fiscal cliff negotiations continue to play out in Washington D.C., will the financial markets continue their upward momentum and end the last month of the year on a positive note?
Securities Issued by State Farm VP Management Corp. For more information, call 1-800-447-4930.
This recap has been prepared by State Farm VP Management Corp. for informational purposes and should not be considered a recommendation to buy or sell any security. Any opinions discussed herein reflect our judgment as of the date of publication and are subject to change.
Mutual Funds Disclosures
It is not possible to invest directly in an index.
The Russell 2000® Index tracks the common stock performance of the 2,000 smallest U.S. companies in the Russell 3000® Index
The Russell 2500 Index tracks the 2,500 smallest companies in the Russell 3000 Index.
The Russell 1000 Index is a stock market index that represents the highest-ranking 1,000 stocks in the Russell 3000 Index.
The Russell Midcap Index measures the performance of the mid-cap segment of the US equity market and is a subset of the Russell 1000 Index.
The Dow Jones Industrial Average is an unmanaged average of 30 actively traded stocks.
The NASDAQ Composite is an unmanaged market capitalization weighted index that is designed to represent the performance of the National Market System.
The S&P 500® Index tracks the common stock performance of 500 large U.S. companies.
The S&P 1500 Index is a stock market index of U.S. stock that includes all stocks in the large cap S&P 500 Index, the mid cap S&P 400 Index, and the small cap S&P 600 Index.
The Morgan Stanley Capital International Europe, Australasia and Far East Free (EAFE® Free) Index currently measures the performance of stock markets of Europe, Australia, New Zealand, and the Far East.
The Morgan Stanley Capital International Europe Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Europe.
The Barclays Capital 1-5 Year U.S. Treasury Index measures the performance of short-term U.S. Treasury Securities maturing within one to five years.
The Barclays Capital U.S. Aggregate Bond Index represents debt securities in the U.S. investment grade fixed rate bond market.
The Barclays Capital Municipal Bond Index is an unmanaged index representative of the tax-exempt bond market.
The Barclays Capital High Yield Index includes all fixed income securities having a maximum quality rating from Moodys Investor Service of Ba1, a minimum amount outstanding of $100 million, and at least one year to maturity.
The Barclays Capital TIPS Index measures the performance of the US Treasury Inflation-Protected Securities (TIPS) market.
The Citigroup 3 Month T-Bill Index is an average of the last 3-month Treasury bill issues (excluding the current month-end bill).
The FTSE EPRA/NAREIT Developed REIT and Non-Reit Index is a subset of the Developed Index, which is designed to track the performance of listed real estate companies and REITS worldwide.
The MSCI ACWI (All Country World Index) Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets.
The Nikkei 225 Index is a price-weighted index comprised of Japans top 225 blue-chip companies on the Tokyo Stock Exchange.
The Credit Suisse High Yield Index is designed to mirror the investible universe of the $U.S. Denominated high yield debt market.
Standard & Poors®, S&P®, S&P 500®, Standard and Poors 500, and 500 are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by State Farm Life Insurance Company, State Farm Life and Accident Assurance Company and the State Farm Variable Product Trust. Neither the Large Cap Equity Index Fund nor the Stock and Bond Balanced Fund is sponsored, endorsed, sold or promoted by Standard & Poors, and Standard & Poors makes no representation regarding the advisability of investing in the Large Cap Equity Index Fund or the Stock and Bond Balanced Fund.
The Russell 2000® Index is a trademark/service mark, and Russell is a trademark of the Frank Russell Company. The Small Cap Equity Index Fund is not sponsored, endorsed, sold or promoted by, nor in any way affiliated with the Frank Russell Company. Frank Russell Company is not responsible for and has not reviewed the Small Cap Equity Index Fund nor any associated literature or publications and Frank Russell Company makes no representation or warranty, express or implied, as to their accuracy, or completeness, or otherwise.
The EAFE® Free Index is a trademark, service mark and the exclusive property of Morgan Stanley Capital International, Inc. (MSCI) and its affiliates and has been licensed for use by the State Farm Variable Product Trust (the Trust). The International Equity Index Fund (the Fund), based on the EAFE® Free Index, has not been passed on by MSCI as to its legality or suitability, and is not issued, sponsored, endorsed, sold or promoted by MSCI. MSCI makes no warranties and bears no liability with respect to the Fund. MSCI has no responsibility for and does not participate in the management of the Fund assets or sale of the Fund shares. The Trusts Prospectus contains a more detailed description of the limited relationship MSCI has with the Trust and the Fund.
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