First quarter review
April 18, 2017
The first quarter of this year was a pretty good one for stocks, even though the market has pulled back a little bit recently from its record high levels.
On March 1, 2017 the S&P 500 hit an all-time record high of 2,400.98. The total return for the S&P 500 for the quarter was a gain of +6.3 percent. The Dow Jones Industrial Average hit its all-time high on the same day, March 1, at 21,115.55. The Dow was up about +4.5 percent for the quarter.
The tech heavy NASDAQ hit a new high on April 3. The NASDAQ hit 5,928.93 early on April 3 before reversing into negative territory. The NASDAQ composite has gained about +9.8 percent this quarter. The price of crude oil dropped this quarter by about -7 percent. According to data from Morningstar, Brent crude rose about 50 percent in 2016 and has given up some of that gain in the quarter this year. The Energy sector has dropped about the same amount as the price of crude.
Precious metals had positive returns for the quarter with gold up about 1 percent and silver up about 14 percent. The price of gold and silver are way off their record highs set back in 2012.
Most bond indices posted a positive total return in spite of rising interest rates. The Federal Reserve raised rates once again at its last meeting and has indicated that slow and steady interest rate increases will continue throughout the year. We could see two or three more rate increases at the next Federal Open Market Committee (FOMC) meetings as the Fed continues tightening.
The S&P 500 Bond index was up +1.21 percent for the quarter. The bond index is considered to be a fixed income mirror for the S&P 500 stock index. The broader based Barclays US Aggregate Total Return index posted a gain of +0.82 percent over the same time frame.
Overall, it has been a positive start to the year for most major asset classes. The major U.S. indices have hit record levels. Fixed income and precious metals have posted modest gains. We'll have to wait and see what happens next quarter. Corporate earnings reporting season will get underway in the next few weeks, and we should see positive earnings growth once again like we did last quarter.
Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information is at his blog at http://www.sellacalloption.com or 775-657-8065. The mention of securities should not be considered an offer to sell or solicitation to buy investments mentioned. Consult your investment professional to understand risks and/or how the purchase or sale of these investments may be implemented to meet your goals. Past performances is no guarantee of future results.