Key Takeaways:
- Stocks performed well in March, capping off a strong first quarter of 2019
- The US economy continues to grow but economists expect slower growth moving forward
- Interest rates moved sharply lower in March as investors were concerned over global growth and dovish central banks.
Global stocks continued their ascent in March, with the S&P500 increasing 1.94% for the month and 13.65% for the year. International equities followed suit, up 0.6% in March and 10.31% for the year. Since the market low on March 9, 2009 following the financial crisis, the S&P500 is up over 400% and continues to run, leaving some investors to question how much further we can go.
The US economy continues to grow, but most economists agree that growth will be slower moving forward as we move toward the later stages of the economic cycle. The Fed has taken a more dovish tone, which coupled with slower growth abroad caused interest rates to fall sharply in the month. The aggregate bond market increased 1.92% for the month, as longer duration bonds rallied. With inflation well within the Fed’s target and unemployment at historic lows, we are still constructive on risk assets but expect volatility and lower returns moving forward.
There was some divergence in sector returns for March, with real estate (+4.92%) and technology (+4.83%) leading the way. Financials (-2.61%) got hurt as interest rates declined and the yield curve inverted while industrials (-1.14%) sold off on the troubles with Boeing. Small caps stocks sold off (-2.09%) in March after a strong rally in January and February, but still lead large cap stocks for the year (+14.58%). Across the globe, investors continue to follow the US – China trade talks and the Brexit saga which have been hampering business investment. Should we see some clarity in these areas, we feel that stocks could have further room to run.
As always, feel free to reach out to any member of the Bernardo Wealth Planning team if you have any questions.
Commentary by:
Bill Roth, CFA
Investment Director
Sources: JPMorgan, Morningstar, Wall Street Journal