Washingtons deal in early January to bypass the most worrisome aspects of the so-called fiscal cliff sparked a rally in U.S. markets, and earnings, housing, and employment data continued to support growth expectations as the quarter progressed. Stocks were also boosted by the Federal Reserves statement that would it would maintain its stimulative monetary policies. While concern over instability in Cyprus sparked volatility toward quarter end, the markets were largely able to shrug off concerns that the European debt crisis would lead to another sell-off for stocks.
For the quarter, the top-performing sectors in the Index were health care and consumer staples, which returned 15.81% and 14.58%, respectively. Amid a favorable environment for equities overall, investors continued to gravitate toward stocks with reliable earnings and above-average dividends. The worst-performing market segments were information technology and materials, with returns of 4.59% and 4.79%, respectively. And despite improving U.S. growth, materials stocks lagged in an environment characterized by falling commodity prices and concern over slowing demand from China.
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