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Quarter-End Insights

Our Take on the Fourth Quarter

In a year that defied many expectations, stocks and bonds continued their rally.

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This year has defied expectations. After the U.S. stock market's 30% rise in 2013, it might have been safe to assume that equities were going to take a bit of a breather this year. Instead, the broad-based Morningstar US Market Index rose another 12%, tacking on nearly 6% in the fourth quarter alone. On the fixed-income side, most investors were expecting this to be the year in which Treasury rates began to rise. Instead, yields on the 10-year Treasury bond fell from 3% to 2.2%.

Oil prices were in sharp focus during the fourth quarter. Crude started the quarter at more than $90 a barrel and ended at less than $53. This precipitous decline was driven by both concerns of oversupply in the market and weakening global demand. OPEC's decision to not cut supply accelerated the fall. Russia's economy was hit especially hard by the decline, and the ruble fell precipitously in the quarter after the country's central bank's emergency rate increase failed to stem the tide.

Jeremy Glaser does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.