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U.S. stocks gain again in May
Growth stocks propel Russell 3000 to second month-end increase
June 2, 2008 — The U.S. broad-market Russell 3000® Index reflected its second consecutive positive month with a 2.1% increase for May. Nearly every market segment measured by Russell's family of U.S. indexes added value and a few, such as the small-cap Russell 2500® Value Index, gained enough in May to show a positive year-to-date return for 2008.
A relatively strong performance by growth stocks pushed each growth index at the various market capitalization tiers to outperform its value counterpart. For example, the Russell 1000® Growth Index outperformed the Russell 1000® Value Index by nearly 4 percentage points for the month.
"Growth won everywhere in May," said Dave Hintz, senior research analyst at Russell Investments. "Technology powered the favorable returns in Russell's growth indexes, while financial services stocks held the value indexes down."
In the Russell 3000, the technology sector advanced 6.7% for the month, while the financial services sector declined 4.2%. At the end of May, the financial services sector suffered from an 11.2% year-to-date decline.
"The out-performance of growth over value is particularly evident in the sector numbers within the May returns," said Hintz. "Financial services stocks comprise 28.7% of the Russell 3000® Value Index and only 8.7% of the Russell 3000® Growth Index, which helps to explain the disparity in returns between those two indexes."
Hintz added that the materials and processing sector in the Russell 3000 also wrapped-up a relatively strong month, gaining 6.1%.
"Traditionally, investors would expect an outperformance by materials to give value a boost in relation to growth, but we're seeing more growth managers becoming bullish on materials in recent years," said Hintz. "The indexes are reflecting this shift and the materials and processing sector now is spread more evenly between the two styles."
Currently, the material and processing sector accounts for 6% of overall weighting in the Russell 3000 Value and 5.3% in the Russell 3000 Growth.
May also proved to be positive for small-cap stocks in particular as the small-cap Russell 2000® Index (4.6%) outperformed the Russell 1000® Index (1.8%) for the month.
"After some gloomy months earlier this year and for much of 2007, small caps have shown more strength recently," Hintz said. "After lagging as they did, they had more room to rebound."
In the Russell 2000, Kosan Biosciences (226.5%) in the health care sector was the top-performing stock for the month of May. The top 20 stocks also included seven from the energy sector with Rentech (84.9%) on top of that group and six from material and processing with Xerium Technologies (176.3%) at the helm of that sector.
In the large-cap Russell 1000, 665 stocks gained value for the month of May with three other energy stocks leading the index: Patriot Coal (63.7%), Continental Resources (49.3%) and W&T Offshore (36.4%). In addition, 10 of the 25 top-performing large-cap stocks came from the technology sector, including Compuware (35.1%).
Looking globally, the Russell Global Small Cap Index (2.2%) slightly outperformed the Russell Global Large Cap Index (1.8%), while among emerging markets the Russell Latin America Index (9.4%) surged relative to the Russell Emerging Asia Index (-4%).
| Sector returns for the month of May |
| |
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Russell 1000 |
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Russell 2000 |
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Russell 3000 |
| Technology |
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6.7% |
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7.1% |
|
6.7% |
| Health Care |
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2.3% |
|
2.7% |
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2.4% |
| Consumer Discretionary & Services |
|
1.3% |
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2.8% |
|
1.4% |
| Consumer Staples |
|
1.6% |
|
2.7% |
|
1.6% |
| Integrated Oils |
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1.6% |
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2.1% |
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1.6% |
| Other Energy |
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6.8% |
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16.7% |
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7.7% |
| Materials & Processing |
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5.7% |
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8.7% |
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6.1% |
| Producer Durables |
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2.8% |
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6.0% |
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3.2% |
| Autos & Transportation |
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2.4% |
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1.4% |
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2.3% |
| Financial Services |
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-4.5% |
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-0.5% |
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-4.2% |
| Utilities |
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4.1% |
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2.7% |
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4.0% |
For additional performance figures on Russell's indexes and the user-friendly Russell index returns calculator, please visit:www.russell.com/Indexes.
About Russell
Russell Investments provides strategic advice, world-class implementation, state-of-the-art performance benchmarks and a range of institutional-quality investment products. Russell has more than $213 billion in assets under management as of March 31, 2008, and serves individual, institutional and advisor clients in more than 40 countries. Russell's industry-leading indexes have $4.4 trillion in assets benchmarked to them as of Dec. 31, 2007. Founded in 1936, Russell is a subsidiary of The Northwestern Mutual Life Insurance Company.
Contacts:
Steve Claiborne, 253-439-1858
Russell Investments is the owner of the trademarks, service marks and copyrights related to its indexes.
Russell's indexes are unmanaged and cannot be invested in directly.
CORP-5468
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Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company.
Indexes are unmanaged and cannot by invested in directly. Returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment.
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