Key Takeaways:

  • The first quarter of 2019 delivered the strongest quarterly gains since 1998, with the S&P 500 returning 13.7% as investors responded to a more accommodative Federal Reserve and progress in U.S.-China trade talks.
  • March brought a rebound in job growth after a weak February report, helping ease concerns about the durability of the market rally.
  • Large-cap and growth stocks led the March advance, while most market sectors posted gains and emerging markets continued to strengthen.

The first quarter may have come to an end but investors don’t want the market advance it experienced to end. The last three months posted the strongest quarterly gains since the first quarter of 1998 and the best individual quarter in 9.5 years. The rally was likely fueled by a Federal Reserve committed to not raising rates and positive comments related to US-China trade talks.

The February Non-Farm Payroll report showed the economy only added 20,000 jobs. This was significantly below the 200,000 trend causing market participants to question the durability of the market rally. However, the March report was back on trend seeming to suggest February’s results were due to one-time events.

During March, large-cap stocks outperformed their small-cap peers, and growth outperformed value. Most sectors were positive during the month, with Information Technology and Real Estate leading the market higher.

Notable Market and Economic Happenings:

  • The S&P 500 ended the first quarter with a 13.7% return.
  • The most widely followed emerging-market index (EEM) hit a new high on Friday. China and countries allied with China are leading the advance.
  • The only FAANG stock trading at a six-month high is Facebook.
  • 1st quarter earnings reports begin this week. Analyst expectations for earnings are fairly low, so earnings misses could punish individual holdings.
  • The ride-sharing company, Lyft (LYFT), IPO’d one week ago at a price of $72 per share. Investors are valuing it at 10X revenues despite losing approximately $1.0B in 2018.

Inspirational Thought for the Day:

“The measure of intelligence is the ability to change.” – Albert Einstein