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Quarter-End Insights

Morningstar's Take on the Third Quarter

China fears and Fed uncertainty sent markets lower in the third quarter, but stocks still aren't cheap.

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China woes, Fed uncertainty, and sliding commodity prices weighed heavily on global markets in the third quarter. In the last 13 weeks, the broad-based Morningstar U.S. Market Index was down more than 10%. The index is now off more than 7%, year to date, but still up at a nearly 13% annualized rate in the last five years.

The proximate cause of the global-growth worries that were responsible for much of the volatility in the quarter was the worse-than-expected news coming out of China. A surprise devaluation of the yuan in August, which was billed by the Chinese government as an effort to give market forces a bigger role in determining the exchange rate, was viewed by the market as a tool to try to make a slowing industrial sector more competitive. The move threw into focus other data during the quarter that underscored a slowdown in the Chinese factory sector, with data report after report coming in below expectations.

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