Looking back, as we close the book on 2017, perhaps the biggest surprise of the year wasn’t any singular event, but rather the market’s indomitable determination to move higher despite concerns about valuations, the threat of rising interest rates, U.S. political drama, and geopolitical events. The near absence of volatility was also notable.

With the S&P 500 posting a positive return in December, 2017 became the first year in the S&P 500’s long history in which the index posted positive returns for every calendar month of a given year. 2017 also marked the 9th consecutive year of positive returns for the S&P 500, matching the record set from 1991-1999. The Dow Jones Industrial Average tacked on over 5,000 points in 2017, the largest-ever point gain in a calendar year, though not its largest percentage gain.

As good as U.S. equity market returns were, international market returns were even better. A synchronized global recovery, country-level idiosyncratic factors, and a weaker U.S. dollar led to the first year since 2012 in which international markets outperformed the U.S. markets (S&P 500) and the best year for international markets (developed and emerging) since 2009.

For all the strength seen in 2017, there was still significant return dispersion. At the sector level, Tech generated the strongest returns at 37%, while Telecom fell –6%. At the individual level, 147 stocks within the S&P 500 gained at least 30%, while a full 25% of stocks (125 companies) within the index posted a negative return.

Despite the fear of rising interest rates, the yield on the 10-Year Treasury ended the year essentially unchanged. From point-to-point, the 10-Year yield actually fell –0.03% from 2.44% to 2.41%. However, over the course of the year, it did experience significant volatility rising as high as high as 2.63% and falling as low as 2.04%. Entering 2018, the general expectation, once again, is that rates will rise.

Regarding global monetary policy, 2017 will likely to be remembered as an inflection point, as it marked a year in which major central banks took steps to normalize policy or signaled their intentions to do so moving forward. That was highlighted by the Fed’s third rate hike of 2017 following its December meeting and its decision in October to begin reducing its balance sheet.