Headwinds will not ease in 2008

A year of volatility ended with a festive slump, yet the US equities market still managed to make modest returns. However, the turbulence is set to continue in 2008

The S&P 500 made modest gains in 2007, making it the fifth consecutive year of positive returns for US equities. Despite the modest return in the index as a whole, it was a year in which volatility picked up, and over half the sectors in the index made double-digit returns. It also marked a reversal of style, as growth stocks outperformed value for the first year since 1999, and large caps outperformed small caps for the first time in seven years. This year will see a continuation of the trends established in 2007, with a slower growth environment continuing to favour growth stocks. While...