March 2019 Market Insights

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    Ryan P. Johnson CFA, CFP®
    Director of Equity Research

    As this goes to print, we will have just passed the 10-year anniversary of the S&P 500’s bear market low close of 676.53 on March 9, 2009. Since that day through the end of February, the market has quadrupled to over 2,800. Including dividends, this represents an annualized total return of 17.7%. After a December we would rather not remember, the stock market’s performance in the first 2 months of this year were quite strong, resulting in a positive 3-month total return of 1.4% as of February 28.

    In February, volatility continued to decrease, interest rates remained steady, and the first read on fourth quarter GDP came in above expectations at 2.6% (full-year GDP growth was 2.9%). However, growth this year won’t come as easily as it did last year. In 2018, we had a year-over-year boost from lower taxes, while this year we started with a government shutdown and global trade concerns. Corporate earnings are expected to decline by about 3% in the first quarter but are still expected to grow by about 4% for the full year. If we do see a decline in earnings, it will be the first quarterly decline since the second quarter of 2016.

    Unemployment remains low, valuations remain decent, and the futures market expects the Federal Reserve to keep rates steady for most of the year. We look for these profitable, but perhaps boring, times to continue. Equity prices may remain range bound for now, but if earnings continue to grow in coming quarters, that range would have the potential to gradually move higher. For this reason, we expect next quarter’s earnings season to be closely scrutinized by Wall Street.

    Lastly, a brief commercial: What is strategic asset placement? Find out at our upcoming Building Portfolios seminar on March 24th live in our New Education Center or join us online. Click here for more information: Building Portfolios