The year saw gains most everywhere one looked, but those gains came with a fair share of volatility as investor sentiment shifted along with expectations for interest rates and macroeconomic growth. Reversing the negativity of Q3, the final quarter saw across-the-board gains for stocks both here and abroad. Growth stocks extended a substantial lead over Value in the fourth quarter, leaving a year-end gap ranking among the widest in history. Cheaper small-caps bucker the broader trend during Q4, though, besting even Large-Cap Growth. While Growth names took the lead in Q4 outside of the U.S., Value stocks retained their 12-month lead over Growth during the quarter. Small-caps trailed in both segments.

While Federal Reserve policy pegged the front end of the curve above 5%, long-term yields sank over the quarter on account of more confident expectations for upcoming cuts to the policy target rate. With short-term yields high and steady and (relatively less-generous) long-term yields on the decline in Q4, gains were seen across the duration spectrum for government and corporate bonds.