NEW YORK (MarketWatch) -- The recent steep rally in U.S. Treasury bonds, helped by investor jitters over European debt and weakening U.S. economic data, isn't likely to last, say some bond investors and strategists.
They expect longer-term rates to rise in coming months as investors pull back from bonds -- whose prices rise when their yields fall -- because growth turns out to be better than markets anticipate. This shift should support the stock market. Short-term Treasury yields dropped to a new record low in recent sessions as bad news piled up about consumer confidence, manufacturing and the job market. In the six months ended Wednesday, an index of Treasury debt had the biggest half-year gains since 1995.
SAN FRANCISCO (MarketWatch) -- The second quarter brought investors in U.S. stock funds face-to-face with some ruthless mean girls -- April, May and June -- and the meeting wasn't pretty.
Taken together, the three-month stretch slammed U.S. stock fund shareholders with their worst quarterly loss since December 2008. The average domestic stock fund tumbled 10.7% in the period through June 30, according to preliminary data from investment researcher Morningstar Inc.
Moreover, the dismal showing wiped out the gains fund investors enjoyed in the year's first three months. For the year through June, U.S. stock funds were down 5.4% on average.
"The market has lost confidence in the growth story," said David Bianco, U.S. equities strategist for Bank of America Merrill Lynch. "It's given up on growth prospects and is fearful of a double-dip recession. That's a long way from where we were in April."
Large-cap stocks, with their global footprint and strong financial shape, were widely thought to have staying power in a downturn, but that proved not to be the case. Large-cap growth funds lost 12% in the quarter, while large-cap value counterparts shed 11.7%, as a stronger U.S. dollar, the eurozone debt crisis and concerns about the global economy weighed on stock prices.
More domestically rooted midcap and small-cap funds made a relatively better showing; midcap growth funds, for instance, fell 9.7%, and small-cap growth portfolios dropped 9.1%.
In fact, only a handful of retail-oriented U.S. stock funds finished the quarter in the black, according to Morningstar. These include midcap-growth focused Monteagle Informed Investor Growth Fund /quotes/comstock/10r!mggax (MGGAX 12.53, +0.06, +0.48%) , up 2.7%, and two large-cap oriented offerings: Stadion Managed Portfolio Fund /quotes/comstock/10r!etffx (ETFFX 9.64, 0.00, 0.00%) , which invests in exchange-traded funds and was up 0.5%, and Wasatch Heritage Value Fund /quotes/comstock/10r!wahvx (WAHVX 8.88, 0.00, 0.00%) , which eked out a 0.2% gain.
