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Third-Quarter Winners and Losers Among U.S. Stock Funds

Domestic equities continued to reach new highs.

After a volatile, but positive, first half of 2016, U.S. stocks continued to climb during the third quarter through Sept. 22. The S&P 500 was up 4.2%, while the Russell 2000 Index was up 10.0%. U.S. employers added an average of approximately 232,000 jobs during June, July, and August, but that wasn't enough to push the Federal Reserve to raise short-term interest rates at its Sept. 21 policy meeting.

Technology stocks within the Russell 3000 Index have led the way thus far in the third quarter, climbing 13%. Top performers included hardware firms

After delivering very solid returns during the first half of 2016, the dividend-heavy utilities and consumer defensive sectors took a breather in the third quarter. Utilities fell 2%, led by declines in Aqua America WTR,

After gaining 30% during the first half of 2016, Brent crude prices were down 4.1% to $47.65 per barrel for the quarter to date. As a result, the energy sector was down 0.5% for the quarter;

Morningstar Style Box Categories

Small-cap funds outperformed their larger-cap counterparts in the third quarter, as they did in the second quarter. Small-growth was the top-performing Morningstar Category in the Morningstar Style Box for the third quarter through Sept. 22, gaining 9.0%.

There was little dispersion between the mid-growth, mid-blend, and mid-value categories during the quarter, as all gained approximately 5%. Bronze-rated

The large-growth category gained 6.0% this quarter. Bronze-rated

Large-blend and large-value were the weakest-performing categories in the Morningstar Style Box for the third quarter, though both still gained about 4%. Neutral-rated

For additional details on Morningstar Categories, please click here.

For a list of the open-end funds we cover, click here. For a list of the closed-end funds we cover, click here. For a list of the exchange-traded funds we cover, click here. For information on the Morningstar Analyst Ratings, click here.

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About the Author

Andrew Daniels

Associate Director
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Andrew Daniels, CFA, CAIA, is associate director of equity strategies for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He helps oversee Morningstar’s U.S.-based equity strategies team and is responsible for qualitative research on prominent equity strategies, including those offered by Harris Associates and Artisan Partners.

From 2018-21, Daniels was based in Morningstar’s Hong Kong office, conducting qualitative research on global emerging-markets and Asia-Pacific equity strategies, in addition to helping on the delivery of manager research services in the region.

Before joining Morningstar in 2015, Daniels worked in corporate finance for Caterpillar and in portfolio management for Evanston Advisors.

Daniels holds bachelor's degrees in finance, economics, and marketing from the University of Iowa, where he graduated with distinction. He also earned a Master of Business Administration from the University of Chicago Booth School of Business. Daniels holds the Chartered Financial Analyst® designation and the Chartered Alternative Investment Analyst® designation. He is also a Certified Management Accountant.

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