During the quarter, equity markets experienced a modest rebound, albeit with higher volatility. The S&P 500 ended the year at 2,044 — 4% below the high it reached in May and basically back where it started 2015. Economic growth was positive for the year, but earnings for the S&P 500 treaded water due to the stronger dollar, a continued significant correction in commodities, and a lackluster pricing environment. The Fed increased interest rates for the first time in nine years, and additional increases are expected in 2016. Historically, markets have performed well after the initial interest rate increase in a tightening cycle. At the same time, the current economic cycle has not been typical, and we are watching for signs of deteriorating fundamentals. For now, we continue to position portfolios for modest economic growth, although we expect the recent volatility to continue.
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