Market Extra: What rose in the third quarter? Stocks, bonds—basically everything

Once again, a “set it and forget it” strategy has paid off for investors.

The third quarter was another winner across the economy, with basically all regions, sectors, commodities, and bond categories seeing gains over the period.

For the U.S. stock market, the quarter was merely the latest notch on the bull market’s seemingly unstoppable march upward. The S&P 500 SPX, +0.37% has risen for eight straight quarters—meaning the last negative quarter occurred in the third quarter of 2015—and it has risen by nearly a third over that period.

Equities were supported by a number of factors over the quarter, notably a better-than-expected second-quarter earnings season, which supported the idea that fundamentals remained strong in corporate America despite high valuations. Continued improvement in the labor market added to the positive tone, helping to reduce volatility down to nearly nothing, while hopes for a business-friendly tax-reform package passing Congress also boosted sentiment.

The Dow Jones Industrial Average DJIA, +0.11% has enjoyed a rally of the same length—up more than 37% over the past eight quarters—while the Nasdaq COMP, +0.66%  had its fifth straight quarterly gain. The Russell 2000 RUT, +0.14%  index of small-cap shares enjoyed its sixth straight quarterly gain.

Those hoping the good times aren’t over do have history on their side. According to LPL Financial, the fourth quarter is historically the strongest of the year. Since 1950, the S&P gains an average of 3.9% over the quarter, and the final three months of the year are positive nearly 80% of the time.

See also: October could determine whether stocks have a great or middling move over the coming year

Wall Street wasn’t the only equity market seeing gains over the quarter, however. Both Europe and emerging markets posted strong quarters of their own, as well as their third straight quarterly advance.

The following table shows the quarterly move of major stock indexes and regions. For Europe and emerging markets, the move is based on popular exchange-traded funds that track the regions.

Security Price move over the quarter
Dow Jones Industrial Average 4.9%
S&P 500 4%
Nasdaq Composite Index 5.8%
Russell 2000 5.4%
Vanguard FTSE Europe ETF VGK, +0.79%   5.9%
Vanguard FTSE Emerging Markets ETF VWO, +1.02%   6.8%

In the U.S., the stock market’s advance was widespread. Of the 11 primary S&P 500 sectors, nine of the posted positive returns over the month.

Sector Price move over the quarter
Utilities 2%
Telecommunications 5.4%
Materials 5.6%
Information technology 8.3%
Industrials 3.7%
Health care 3.2%
Financials 4.8%
Energy 6%
Consumer staples -2%
Real estate 0.1%
Consumer discretionary 0.5%

Among the sectors, two of the biggest gainers represented both a continuation, and the reversal, of pronounced 2017 trends. The rise by technology shares was related to the continued dominance of the so-called FAANG trade, an acronym for Facebook Inc. FB, +1.23% Apple Inc. AAPL, +0.55% Amazon.com Inc. AMZN, +0.52% Netflix Inc. NFLX, +0.36% and Google parent Alphabet Inc. GOOG, +1.01% which have helped spur a tech-led market advance. Among the most notable movers, Facebook jumped 13% in the quarter, while Apple was up 7%.

Energy’s rise, on the other hand, represented a major reversal. While the industry was one of the biggest gainers in the quarter, it remains the big loser of 2017, down more than 9%, the only S&P 500 sector to be down thus far this year.

The weakness in consumer staples came on poor performance by food stocks in the quarter. Among the notable decliners, Kellogg Co. K, -0.70% fell 10.2% over the quarter, while J.M. Smucker Co SJM, -0.18% lost 11.3% and Campbell Soup Co. CPB, -0.49%  was down 10.2%. Kraft Heinz Co. KHC, -0.54%  was down 9.5%.

Commodities also performed well in the month, although there was heavy volatility in September given Harvey and Irma, two hurricanes that had major impacts on production centers in the U.S. The moves are based on ETFs that track the commodities, a popular way for investors to get exposure to the space without owning the underlying asset.

See also: What’s next for industrial metals after a third-quarter rally?

Fixed income saw tepid gains over the quarter, but the general move for bonds was higher. In large part, the moves in the quarter were related to the Federal Reserve’s most recent meeting, when the U.S. central bank announced that, for the first time in nine years, it would start reducing the size of its $4.5 trillion asset portfolio commencing in October.

Treasurys saw a selloff intensify in late September, driving up yields across the curve, as the Fed reaffirmed expectations it would deliver another rate increase by year-end and Republican leaders unveiled a tax plan that could significantly add to the federal deficit.

Here are how key bond ETFs performed over the quarter.

ETF Price move over the quarter
iShares Core U.S. Aggregate Bond ETF AGG, -0.08%   0.1%
iShares iBoxx $ Investment Grade Corporate Bond ETF LQD, +0.09%   0.6%
iShares iBoxx $ High Yield Corporate Bond ETF HYG, +0.15%   0.4%
iShares 1-3 Year Treasury Bond ETF SHY, -0.02%   -0.05%
iShares 3-7 Year Treasury Bond ETF IEI, -0.15%   -0.05%
iShares 7-10 Year Treasury Bond ETF IEF, -0.12%   -0.1%
iShares 10-20 Year Treasury Bond ETF TLH, -0.08%   0.1%
iShares 20+ Year Treasury Bond ETF TLT, +0.22%   -0.3%

Read: Bond ETF inflows top $100 billion for 2017

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