By Brian Jacobsen, Chief Portfolio Strategist; John Manley, Chief Equity Strategist;
and James Kochan, Chief Fixed-Income Strategist
If you watched the news during the first half of the year, it didn't take long for the topic to turn to Europe. We wonder if news reporters ever felt like they were stuck in a rut—no matter what they wanted to write about or report on, the topic always circled back to Europe. The economy and markets also seemed to be stuck in a rut. Investors' bleak expectations and their intolerance of any action or inaction that would encourage deflationary conditions were obvious in the equity markets' performance in the first half of 2012. Stocks gave us quite a ride: strong and persistent gains in the first quarter, stalling momentum and rotation in April, sharp declines in May, and improbable rebounds in June. Turmoil in Europe, slow U.S. growth, and a cautious Federal Reserve (Fed) all suggest that interest rates and bond yields will not be increasing significantly during the next 12 months.
Overview | The economy | Equities | Fixed income | Asset allocation | The bottom line