Market Updates

Source: MFA & Morningstar

Large company US stock returns are shown in black, US bond returns are shown in orange.

This picture illustrates a pleasing run of positive performance: only one quarter in the past eight has been negative for stocks, with quarterly average stock performance at 6%.

Bonds haven’t fared as well, but still the outcome still has been constructive for investors. With two quarters of negative returns and one of essentially zero return, quarterly bond performance has averaged 2%.

One of the questions at the front of mind for many investors is: will the positive trends persist?

Here’s some historical perspective: according to research from Jessica Rabe at DataTrek (an independent research firm), the odds are greater for returns to reach their high point for the year in the 4^th quarter when the stock market is having a good year.

DataTrek looked at annual returns each year since 1980 and catalogued the month in which the stock market peaked each year.

The table below shows stock market peaks by month; percent of time since 1980 that the stock market peaked for the year in that month; and average annual return when stock market peaked in a given month.

Source: DataTrek

Here are two key take-aways from DataTrek’s research:

• the S&P 500 has tended to reach its high point for the year in December when returns for the full year were strongly positive (this happened in 24 of the 45 years since 1980, or 53% of the time – bottom of the chart)
• the stock market has tended to reach its high point for the year in January when returns for the full year were strongly negative (5 times in 45 years, or 11% of the time – bottom of the chart)

As of Friday, October 3, US stocks had returned 15% year-to-date.

Applying her research to today’s market environment, Rabe at DataTrek concludes: “based on historical seasonal returns over the last 45 years, the S&P has significantly higher odds of peaking in the final quarter of this year rather than in September.”

It’s important to recognize that past performance doesn’t guarantee future results. But we can use history as a guide and as a way of informing our thinking about how things may unfold in the future.

While we avoid using terms such as “with certainty” and “without doubt”, the current environment of economic expansion, strong company earnings, and a Federal Reserve predisposed to bring down short-term interest rates seems conducive to a continuation of positive financial market trends, both for stocks and bonds.

That said, one area of emerging weakness which we’re watching closely is the US labor market.

The chart below from JP Morgan Asset Management presents monthly jobs gains using data from the Bureau of Labor Statistics. It shows that job growth slowed meaningfully over the summer of 2025.

Source: JP Morgan Asset Management.

Monthly jobs gains had been inflated because of “pandemic catch up” in 2021 and 2022 but still averaged over 200,000 jobs per month in the last couple of years through spring 2025.

This trend moved down to an average of 29,000 new jobs per month this summer.

If the employment situation downshifts further into persistent net job losses (yet to be determined) this could put downward pressure on US economic growth and put the stock market “good times” at risk.

And a new source of uncertainly stems from the shutdown of the US federal government. More information on that situation in next week’s upcoming blog “Government Shutdown Briefing”.

-RK

During the summer of 2025, financial markets have been somnolent – so far.

In a typical month which has 21 trading days, the S&P 500 index of large company stocks registers a daily rise or fall that exceeds 1% on average four times (trading days).

This means that about 80% of the time, stock market movements are unremarkable.

Since the summer solstice through the end of July, there were only two days when stocks moved more than 1% – and both were in a positive direction.

In this period of calm, stocks have been trending up, and the S&P 500 reached a new all-time high on July 28.

Recently, stock prices have been supported by company earnings reports for the 2^nd quarter of 2025, which have validated that corporate revenues and profitability are generally strong, and in many cases have exceeded Wall Street’s earnings estimates.

Somnolence “took a break” on August 1^st, however, when the Bureau of Labor Statistics (BLS) released its monthly employment report showing significant weakness in the labor market – and stocks proceeded to drop by 1.5%.

Specifically, downward revisions to May and June showed that 253,000 fewer jobs were created in these two months than previously reported.

In July, a net 73,000 new jobs were added – well below a level of 100,000 or more new jobs added per month that is commonly viewed as a sign of a healthy, growing economy.

The BLS employment report followed an announcement on July 30 which showed that the overall rate of growth of the US economy had slowed during the first half of 2025.

The Commerce Department said the value of all goods and services produced across the economy, or gross domestic product (GDP) grew at an average annual rate of 1.2% in the first six months of this year, a step down from the 2.5% average pace in 2024.

The weaker labor market, and slower pace of economic activity, may be enough to convince the Federal Reserve to change its policy and reduce its target for short-term interest rates – commonly referred to as a “rate cutting cycle” – as we approach autumn and head into winter.

So, recent data releases and stock price movements seem to indicate that both the US economy and the financial markets are at an inflection point.

If the current economic expansion holds up, and if the Federal Reserve begins to reduce interest rates soon, the stock bull market could continue to charge forward.

But if consumer spending sours, if businesses retrench, and if the economy goes from expansion to contraction, it could mean tougher times for stocks – even if the Federal Reserve cuts interest rates.

JP Morgan Asset Management researchers looked at the relationship between Federal Reserve interest rate policy changes and stock market performance against the backdrop of economic expansions and recessions going back 40 years.

The research shows:

• Stocks have done well when Fed rate cutting cycles have coincided with slower (but still positive) economic growth – large company US stocks climbed on average by 18% in the year following the first Fed interest rate cut of a new cycle
• When rate cuts coincide with recessions, stocks have suffered – losing an average of 5% in the year following the first interest rate cut of a new cycle

The key takeaway: consumer and business activity, along with the direction of Fed interest rate policy, will strongly influence the path along which financial markets will travel in the months ahead.

For the month of July, US stocks delivered satisfactory returns. Technology stocks did particularly well, gaining 4.6% for the month.

Tech stock strength helped to boost US large company stock returns, which gained 2.3% for the month. Small company US stocks rose by 1.7%.

The US bond index return was slightly negative last month as longer-term bond yields edged up.

And some of the steam was taken out of foreign company stocks, which declined by 2.1% in dollar terms, due primarily to a stronger US dollar.

The US dollar snapped its 5-month losing streak versus major developed economy currencies and rose by an average of 3% in July.

The chart below shows financial market performance for the month of July and Year-to-Date (YTD).

Source: Moore Financial Advisors & Morningstar

-RK

Wednesday, July 2 marks the halfway point for the calendar year of 2025 – 182 days behind us, with 1 Wednesday, July 2 marks the halfway point for the calendar year of 2025 – 182 days behind us, with 182 days remaining.

And summer has kicked off in the northeast with an intense heat wave. After a cool late winter and early spring, stocks, too, are sizzling once again.

The chart below shows the path thus far in 2025 of the S&P 500 Index of large company US stocks.

Source: Wall Street Journal

The release of the made-in-China, low-cost artificial intelligence (AI) model DeepSeek caused US technology stocks to wobble in late winter.

Then, the imposition of draconian tariffs by President Trump in early spring precipitated a stock market plunge of nearly 20% from the recent peak in February.

But a pause in the most severe tariffs allowed for a stock market rebound. As of Monday, June 30, stocks reached a new all-time high.

Top of mind for many investors: can the stock market good times continue to roll?

In the absence of further trade / tariff setbacks, the answer is: probably yes.

The near-term path now seems to favor stocks moving higher amid ongoing economic growth; greater certainty on taxes; contained inflation; the anticipation of falling interest rates by the fall; and a consumer that continues to spend.

For the intermediate term, the precise price path that any asset will follow is impossible to discern. The chart above could be Exhibit 1 supporting this statement.

But for long-term investors who map out a plan and stick to it, the odds of realizing a satisfactory return are quite good.

For example, JP Morgan Investment Management’s Guide to the Markets shows that, for a balanced portfolio of stocks and bonds (60% stocks / 40% bonds, rebalanced annually) returns for each and every 10-year period since 1950 have been positive.

For the month of June, US stocks were up 5.1%, foreign stocks rose by 2.4%, and US bonds returned 1.4%.

Year-to-date, foreign stocks were the biggest winner, up by 20%. A weaker US dollar has contributed to the stellar returns for US investors in foreign stocks. Also year-to-date, US stocks have climbed by 6% and bonds have returned 4%.

For a slightly longer historical perspective, the chart below shows returns by quarter for the past 12-month period for US stocks and bonds.

Source: Moore Financial Advisors & Morningstar

-RK

In Wayne’s World, the early 1990s cult-classic movie, protagonist Wayne and his sidekick Garth play street hockey on the neighborhood thruway. Automobiles pass frequently. Wayne and Garth don’t mind.

Street hockey provides an interesting model for thinking about financial markets. The cadence of shoot-score / shoot-miss / pause / move net off the street-move net back onto the street / restart is all part of the contest.

At times there are scores (when the market goes up). Other times, there are misses (when the market goes down). And, once in a while, external factors alter the field (for example, new and confusing government policy changes).

But the game continues under all conditions and players have an easier time if they take the changes in stride and continue to move forward.

Drawing the analogy to today’s situation, we’ve just passed through a miss / pause / net off the street phase. The net is now back in the road and the play has restarted.

And what of all the concerns about tariffs?

Some of us remain gravely concerned about tariffs, and also about unconventional (and even radical) policy approaches.

But many investors seem to think that Trump learned a lesson back in April, when the rout in stocks, bonds, and the US dollar forced a suspension of much of the global tariff rollout.

The financial market consensus reached in early May was that the final tariff plan is likely to be far more modest than the initial plan revealed on “Liberation Day” in early April, which has cleared the way for a sizable stock market rally.

Also, earnings reported by large US companies for the first quarter of 2025 were generally better than feared, and recently released economic data has exceeded expectations.

Gloom was pervasive in April, but lifted a bit in May as results haven’t been so bad.

A corollary to earnings is the confidence evidenced by company managers through their willingness to continue to spend money on current projects, and plan for new projects that will support and grow their businesses.

According to information compiled by Bloomberg, most of the largest publicly-traded companies (71%) that provided guidance after Trump’s early April bombshell have decided to maintain their capital expenditure outlook.

About 8.5% of firms have increased their spending plans, while 18% have revised them lower; 3% have withdrawn guidance. These results show that business confidence largely remains intact.

Some moderation (or at least temporary reprieve) in the tariff regime, as well as business profitability holding up and business spending plans remaining mostly intact, paved the way for “Game On” in the financial markets.

The old saying “sell in May and go away” was a dud in 2025, because last month was the best performing May in a quarter century.

The chart below shows monthly stock market performance for each May going back to 1990.

Source: Bloomberg

A second old saying, “markets climb a wall of worry” is holding true for 2025. Uncertainty has been outsized, but nonetheless, most asset classes at home and abroad have now registered positive returns.

Here’s how the performance of various asset classes stacked for the month of May and thus far in 2025:

Source: Moore Financial Advisors & Morningstar

-RK

For drivers, a car U-turning on busy roadway is universally viewed as negative. For investors, the recent policy U-turn by the Trump administration on its busy tariff agenda was universally viewed as positive.

As the tariff announcements came fast and furious in early April, the financial markets took another leg down.

During four trading days early in the month (April 3^rd – 8^th) US large company stocks dropped by 12%.

This downdraft, on top declines registered in the first quarter, brought the cumulative drop in stocks close to a bear market – down 19% from the most recent high on February 19.

Then, President Trump said he’d pause tariffs on dozens of countries for 90 days after coming under intense pressure from business leaders and investors to reverse course.

On April 9, the stock market delivered a 1-day rally of 9% following that announcement.

As of the end of April, here’s how the situation stood with regard to tariffs:

• A 90-day pause on so-called “reciprocal” tariffs (apart from a 10% universal tariff)
• Further tariff exceptions for computers, smartphones and electrical equipment
• Some short-term exclusions from the 25% tariffs on imported vehicles and auto parts under consideration
• Conversely, the Administration has ratchetted up tariffs on China to 145%
• New levies on imported pharmaceuticals, lumber and semiconductors are expected in coming months

Beijing’s countermove was to raise tariffs on all US goods imported into China to 125%.

Financial market participants are now interpreting the situation as less of a global trade war, and more of a tariff showdown between the US and China.

This “less bad” news was enough to allow the stock market to turn back up during the second half of April.

When all was said and done (or, perhaps more aptly put, after all that was said), here’s how things shook out in the financial markets for the full month of April:

Note: Foreign Stocks = MSCI EAFE Index; Tech Stocks = Russel 1000 Technology Index; Bonds = Bloomberg US Aggregate Bond Index; US Large Co = S&P 500 Index; US Small Co = Russell 2000 Index

Year-to-date through April 30, here are returns for the above asset classes:

•  Foreign stocks, +12%
• Tech stocks, -10.4%
• Bonds, +3.2%
• US Large Co, -5.1%
• US Small Co, -11.6%

Positive momentum pushed the stock market up further during the first two days in May.

By the close of trading on Friday, May 2, the S&P 500 index of large company US stocks had rallied for nine straight trading sessions and had reclaimed all losses registered in April.

The quick recovery from April’s intense bout of crisis-like volatility indicates that investors seem believe the American economy isn’t about to slide into recession, and that it will take a much bigger shock to push stocks into a bear market.

-RK

Given the developments that have occurred in early April – implementation of draconian trade policy and a sharp drop in stocks – the first quarter of 2025 already seems like ancient history.

The three main developments during the January – March 2025 period were:

Stocks reached new all-time highs in mid-February, but didn’t stay at those lofty levels for long as tariff concerns set in

1. Foreign stock returns exceeded US stock returns by the widest margin in some time, helped by a weakening US dollar
2. Bonds provided ballast for portfolios by delivering positive returns

Here’s a snapshot of quarterly stock and bond performance for the last four quarters:

Note: US Large Co = S&P 500 Index; US Bonds = Bloomberg US Aggregate Bond Index

-RK

Our January Market Update highlighted “beneath the surface” turbulence in the financial markets. In February, that turbulence emerged, pushing stock prices lower – and pressure accelerated into early March.

The US stock market hit a new all-time high on February 19. But the mood in the US financial markets, which had been generally positive since election day, shifted due to investors’ nervousness driven by:

1. The lofty prices of big tech stocks
2. The possibility of slower economic growth
3. Repercussions related to trade policy and tariffs

Since mid-February, technology shares have been leading the way lower for US stocks. From the February peak to the close of trading on March 10, the Nasdaq 100 technology-focused stock index declined by 12.9%.

Declines in the broader stock market have been less pronounced. The S&P 500 Index of large company stocks has declined by 8.6% from the mid-February peak.

Interestingly, foreign-company stocks have held up relatively well, with the benchmark MSCI EAFE Index of 21 developed countries (excluding the US and Canada) rising by about 1% since February 19.

The repercussions related to trade policy and tariffs are unclear at this point because the policies themselves are unclear, with the administration taking an on-again, off-again approach to both policy formulation and implementation.

However, consumers’ concerns amped up in February. Worries about the future direction of the US economy were displayed in two monthly surveys:

The University of Michigan’s Index of Consumer Sentiment for February declined sharply from the January reading, and inflation expectations took a big step up from January. This monthly survey polls at least 500 individuals each month from across the US.

A separate survey of consumers, conducted by The Conference Board (which interviews approximately 300 consumers each month) showed similar results: a steep decline in consumer confidence, marking the third straight decline, and an increase in inflation expectations.

Below is a chart showing the Consumer Confidence Index, published on The Conference Board’s website. The blue line shows the history of the Consumer Confidence Index. The grey bars indicate periods of economic recession.

According to The Conference Board, a reading below 80 generally indicates a potential recession is ahead, based on consumers’ short-term outlook for income, business, and labor market conditions. Currently, the data is healthy distance from signaling recession.

A senior economist of global indicators at The Conference Board had this to say about February’s survey: “References to inflation and prices in general continue to rank high in write-in responses. Most notably, comments on the current administration and its policies dominated the responses.”

Without clarity on policies that will affect jobs and the cost of goods and services, consumer concern likely will stay high, and consumer activity may downshift.

Because consumers make up the largest component of the US economy – consumer spending accounts for roughly two-thirds of Gross Domestic Product, or GDP – financial market participants smell trouble, which has pressured stocks.

For the month of February, large-company foreign stocks (MSCI EAFE Index) came out on top and gained 3.1%. US investment-grade bond returns (Bloomberg Aggregate Bond Index) also were appealing, with a gain of 2.2%.

Large-company US stock returns, measured by the S&P 500 Index, declined by 1% in February. Technology shares, measured by the Nasdaq 100 Index fell by 2.7%, and Small-Company US Stocks fell by 4.8% (CRSP US Small-Cap Index).

Here’s a snapshot of February market performance (note that returns from the first week of March are excluded from the chart below):

Note: Foreign Stocks: MSCI EAFE International Index; US Small Co: CRSP US Small Cap Index; US Large Co = S&P 500 Index; US Tech Stocks: Nasdaq 100 Index; US Bonds = Bloomberg US Aggregate Bond Index

-RK

Stock and bond market performance for the first month of 2025 was pleasing.

Foreign stocks gained 4.8%, US small company stocks climbed 3.9%, US large company stocks went up 2.7%, and technology shares rose by 2.1%. Bonds were in the black, too: high-quality, intermediate-term debt returned 0.5%.

However, there was turbulence beneath the surface of the stock market, mainly due to developments in the technology sector.

One part of the Artificial Intelligence environment is Large Language Models (LLMs). These AI-powered systems are trained on massive amounts of text data, which facilitate human-like text responses to a wide range of prompts and questions.

ChatGPT is a widely recognized and utilized LLM. It was developed by OpenAI, of which Microsoft holds a minority ownership stake.

All the big tech companies, including Alphabet (Google), Amazon, Apple, Meta (Facebook), Microsoft and Tesla are spending huge amounts of money investing in LLMs and anticipating big future payoffs on this invested capital.

In addition to these well-recognized firms, a constellation of lesser-known US companies (big and small) that supply software, equipment, storage, and energy to support AI initiatives have been riding the AI wave higher.

In mid-January, a new chatbot called DeepSeek caught the attention of tech investors for several reasons: it was developed cheaply; it runs on less-expensive equipment; it is fast; and it is good. Also, its maker is a small Chinese company, not a Silicon Valley behemoth.

Whether or not DeepSeek becomes a true competitive threat to US technology companies is yet to be seen.

But it was a shot fired across the bow of US technology companies, and some US tech stocks swooned for a few days at the end of the month.

Why does this matter for US investors? The main reason is that the US stock market has become more dependent on ever-higher profits, and ever-higher stock prices, from big tech.

The information technology sector has grown from about a quarter of the US stock market a few years ago to more than one-third today.

When the future profitability of US tech companies is called into question, and when tech stocks slip, it’s harder now for stocks in other sectors to pick up the slack.

This also means that even US investors who hold well-diversified portfolios are likely to feel pain if a correction in tech stocks materializes.

In January, tech turbulence was contained to a few days, and stocks generally finished higher at the end of the month.

However, the DeepSeek tremor was a reminder that troubles for technology companies, if sustained, would probably have far reaching effects for all investors.

Regarding the safer side of investing, the “big news” in the bond market for January was: no news.

The Federal Reserve held their first FOMC meeting of 2025, where interest rate policy is reviewed and discussed, and… nothing happened.

Market participants are now expecting the Fed to stand pat for a while, and to keep the target for short-term interest rates steady for the next six months. This contrasts with the “rate cuts” that occurred during the second half of 2024.

Why is no news from the Fed big news?

It likely means savers will continue to enjoy a satisfactory rate of return on their guaranteed money that is kept in high-yield bank savings accounts and bank CDs.

With the lower bound of the Fed Funds target rate at 4.25%, this probably means short-term CDs are likely to provide a 4%+ annual percentage yield (APR) during the first half of 2025.

It also means that the Fed remains vigilant in their fight against inflation.

If the Fed is successful in convincing market participants that inflation is indeed under control, it should translate to a hospitable environment for investors who own intermediate- and longer-term bonds.

With 10-Year Treasuries yielding about 4.5%, it’s reasonable to expect 5%-plus returns for 2025 from bond allocations in investment portfolios, if inflation, and inflation expectations, remain contained in 2025.

But a trade war could be problematic for financial markets.

An emerging risk, especially to the bond market, is a new tariff regime. On February 1, President Trump announced new tariffs on a range of goods coming into the US from Canada, Mexico, and China.

Trade is huge, diverse, and complex, so the ultimate impact of higher duties isn’t easy to know. A lot depends on size, width, and length: how high tariffs go, how broadly they’re applied, and how long they last.

If tariffs come and go quickly, the inflationary impact will be minimal. But a new regime with high tariffs applied to many trade partners that lasts for an extended period could usher in higher inflation.

If expectations about future inflation go up substantially, this will likely mean higher bond yields, with lower prices and lower returns for bonds – especially for intermediate and longer-term bonds and bond funds.

And if history does rhyme (to paraphrase Mark Twain) then resurgent inflation may well prove to be a challenge for stocks, too.

Performance for the month of January is pictured below:

Note: Foreign Stocks: MSCI EAFE International Index; US Small Co: CRSP US Small Cap Index; US Large Co = S&P 500 Index; US Tech Stocks: Nasdaq 100 Index; US Bonds = Bloomberg US Aggregate Bond Index

-RK

In most instances, from Christmas through year end, investors are treated to a “Santa Claus rally”, where stock prices rise. But 2024 had an atypical end, with stocks falling flat.

The closing drop last year marks only the 12th time the benchmark S&P 500 index fell by more than 1% over that span since 1952.

So, does a “Santa Slump” mean poor returns going forward? Not quite, according to Bespoke Investment Group.

The research outfit found that, in the twelve months following a year-end decline of more than 1%, stocks tended to do better.

In fact, Bespoke found that large company stocks’ median performance after those eleven down years has seen a roughly 12% gain.

For 2024 as a whole, it was another banner performance for U.S. stocks.

In 2024, the S&P 500 index of large-company stocks rose nearly 25% and hit 57 new all-time highs along the way – the most since 1928. This stellar performance follows a 26% return for US stocks in 2023.

Once again, we have the technology sector, and the excitement around Artificial Intelligence (AI) to thank for these more-than-satisfactory gains. The seven largest tech companies, often referred to as the “Magnificent 7”, rallied 48% in 2024.

Stock gains were slightly less concentrated last year. The “Mag 7” contributed 55% of the return of large-company stocks, compared to 63% in 2023.

Outside of the US, stock returns were positive, but much less impressive. The MSCI EAFE (Europe, Australasia, and the Far East) index of foreign stocks rose by a pedestrian 3.5%.

One reason why foreign stock returns trailed far behind US stocks is that the US dollar strengthened by about 7% compared to other major foreign currencies.

Dollar strength acts as a drag on foreign stock returns, when those returns are measured in US dollars.

Another reason is that the Mag 7 is unique to the US.

While successful technology firms do exist outside US borders, no other country or region has an equivalent group of dominant, AI-focused companies like Amazon, Apple, Alphabet, Meta, Microsoft, Nvidia, and Tesla.

Bond returns also lagged far behind those of US stocks. Through September, intermediate bonds registered pretty good performance, returning about 5%.

But as the odds of a Republican victory at the polls went up in the fall, so too did interest rates (the concern being resurgent inflation), which had a negative effect on bond prices.

By the end of 2024, intermediate-term bonds, measured by the benchmark Bloomberg US Aggregate Bond index, returned 1.3%.

Short-term bond funds, where prices are much less influenced by changes in interest rates, did better, posting returns ranging from 4 – 5%.

Here’s a snapshot of quarterly US stock and bond performance in 2024:

Note: US Stocks = S&P 500 Index; US Bonds = Bloomberg US Aggregate Bond Index

-RK

Few were nonplussed by the outcome of the Federal Reserve’s meeting on November 7: a 0.25% cut in short-term interest rates.

The Fed has been consistently telegraphing a message that it believes there is room for further interest rate reductions.

The top of the target range for the Federal Funds rate, which influences how other short-term interest rates are set, is now 4.75%, down from a recent peak of 5.5%.

Somewhat surprising was how Americans voted in the November 5 presidential election.

Opinion polls had been forecasting a statistical dead heat, but the margin of victory in the popular vote was wider than expected: 1.6 percentage points, or about 2.5 million votes, in favor of Donald Trump.

More surprising was the gap in electoral votes (312 to 226), and that both houses of Congress will be under Republican control in January.

The biggest surprise for investors in November, though, was the extent to which the US stock market rallied.

The S&P 500 and the Dow Jones Industrial Average indices delivered their biggest monthly percentage gains of 2024 in November.

Stocks have pushed higher on expectations that proposed tax cuts and deregulation will further boost corporate profits.

And stocks have largely ignored the potential risks, such as higher inflation, that may weigh on the financial markets if pledges to impose tariffs on US trading partners come to pass.

For the month of November, US large company stocks gained 6% and US small company stocks did better still, registering an increase of 10.5%.

US investment-grade bonds returned 1.1%. Foreign stocks, where returns are measured in US dollars for US investors, struggled as the US dollar moved higher, and declined by 0.3%.

Year-to-date, US large company stocks have gained nearly 28%. US small company stocks are up by 23%. Foreign stocks have risen by about 6.5%, and US investment-grade bonds have returned 3%.

Here’s a snapshot of stock and bond performance for November:

US Small Co Stocks: CRSP US Small Cap Index; US Large Co Stocks = S&P 500 Index; US Bonds = Bloomberg US Aggregate Bond Index; Foreign Stocks = MSCI EAFE Index

-RK