Fourth Quarter Market Recap
A return to volatility may best describe the markets for the fourth quarter of 2015, as they were impacted by economic stress in China, coupled with underwhelming corporate earnings reports, and falling oil prices. While some economic sectors, such as housing and labor, offered favorable news, others, including exports and wages, showed little in the way of positive movement. Nevertheless, despite inflation running below the Fed's target rate of 2.0%, there were enough signs of overall economic growth to prompt the Federal Open Market Committee to raise interest rates in December for the first time since 2006.
Although stocks finished mostly in the red for the year, they rallied in the fourth quarter. The S&P 500 finished up 6.45%, while the Dow closed the quarter up 7.0%.
U.S. Treasuries saw prices fall during the period as the yield on 10-year Treasury bonds jumped 22 basis points for the quarter. Oil prices continued to fall, dropping from $46.36 per barrel at the end of the third quarter to $37.07 per barrel at the end of the fourth. Gold, meanwhile, also felt the effects of the global economy, finishing the fourth quarter at roughly $1,060.50 an ounce compared to $1,114.50 an ounce at the end of the prior quarter. Finally, not all falling values are necessarily bad, as the average retail price of a gallon of regular gasoline fell $0.29 to $2.034 at the end of the quarter.
As the year came to a close, the Fed finally raised interest rates based on some favorable economic news, particularly on the labor front and, to a somewhat lesser extent, in the housing market. The Fed was expected to consider three to four more rate increases during 2016, but with falling oil prices, inflationary trends that have been less than robust, and an initial stumble out of the gate during the first week of trading in 2016, additional rate hikes for 2016 are far from certain.
The performance quoted represents past performance, which does not guarantee future results. This summary represents the views of the portfolio manager as of December 31, 2015. Those views may change, and the Funds disclaim any obligation to advise investors of such changes. The Azzad Funds are self-distributed and available by prospectus only. A free copy of the prospectus, which contains information about the Funds’ risks, fees, and objectives, and other important information, is available at www.azzadfunds.com or by calling 888.350.3369. The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks measuring the performance of those Russell mid-cap companies with higher price-to-book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000 Growth index. The Dow Jones Sukuk Index is designed to track the performance of global Islamic fixed-income securities, also known as Sukuk. The index includes U.S. dollar-denominated, investment-grade Sukuk that have been screened for Shari’ah compliance.