Capital Markets Commentary- 1st Quarter 2010

In the first quarter of 2010, the U.S. stock market continued to post positive returns. This was the fourth consecutive quarterly gain, as investors continued to buy stocks and shun money market investments, which continue to yield virtually nothing. The S&P 500 Index gained 5.4% in the fourth quarter, and the Russell 1000 Index gained 5.7%. In fact, this was the best first quarter gain in the S&P 500 Index since 1998.

Changing the trend seen in the fourth quarter of 2009, value equities significantly outpaced their growth counterparts, as the Russell 3000 Value Index returned 7.0% vs. 4.9% for the Russell 3000 Growth Index. This pattern of value outperforming growth was evident across market capitalizations. The Russell 2000 Value Index returned 10.0%, the best performing segment within the U.S. stock market in the first quarter, and was significantly better than quarterly gain of 7.6% for The Russell 2000 Growth Index. In the mid cap arena as measured by the Russell Midcap Indices, value stocks outpaced their growth counterparts with a return of 9.6% vs. 7.7%, respectively. Socalled “mega cap” value stocks gained more than their growth counterparts, as the Russell Top 200 Value Index gained 5.6% versus the Russell Top 200 Growth Index’s gain of 3.5% in the first quarter. From a market capitalization perspective, small cap stocks outperformed mid cap equities, which in turn outperformed large capitalization stocks. Respectively, in the first quarter The Russell 2000 Index returned 8.9%, The Russell Midcap Index gained 8.7% and The Russell 1000 Index returned 5.7%...