Amid heightened volatility, world stock markets posted positive returns for the first quarter. In the US, the rally was strongest in small and mid cap stocks. Energy and industrials outperformed the rest of the sectors, as commodity prices continued rising. In foreign markets, Europe shrugged off concerns about sovereign debt defaults and led developed country gains, which collectively outpaced emerging markets fighting the headwinds of inflation and rising interest rates. Japan declined, precipitously after the earthquake and nuclear crisis.