The “Trump trade” that propelled markets after the election on the hope for loser regulations continued for much of the quarter
Quarterly Economic and Market Reviews
Dave's quarterly reviews of markets, the economy and relevant current events. They include our thoughts on client portfolios and address timely planning issues.
Brushing off expectations for a market decline if Donald Trump were elected, the markets reversed by the end of the day after the election.
This period got off to a strong start before somewhat fading towards quarter-end but the quarter was positive overall.
All was relatively calm for most of the quarter, as US stocks floated in a range of about +/-2.5% and international stocks actually rebounded 5%, partly on the expectation that the UK would vote to remain in the European Union.
The slide in stock markets in December continued into January, with the Dow having its worst opening day of the year in 84 years and the Chinese market experiencing such steep declines that it closed for the day after being open for a total of 14 minutes.
Despite a market decline toward year-end, the quarter was generally positive for stock market returns. Still, for the year US stocks had their worst performance since 2008 and both the Dow and S%P 500 finished with small negative returns.
The quarter was dominated by stock market turmoil and indicators of slowing growth in China. Along with mixed economic data in the US, domestic stock markets turned in their worst quarter since 2011.
The focus for the quarter can be summed up pretty easily – The Fed!! Greece!! Greece!! The Fed!! The musical chairs stopped on Greece at quarter end, and the S&P 500 eked out a tiny gain (after dividends) after hitting an all-time high close in May.
The quarter was a bit of a bumpy ride, but the broad US market still eked out a positive return for the quarter. The S&P 500 had its longest “down streak” – 5 days – in 13 months to start the year, which got investors’ attention.
Despite a slide on New Year’s Eve, a Santa Claus rally lifted the US stock market to a respectable return for the quarter. This was despite two slumps in October and December, with October flirting with the 10% “correction” level before investors came back into the market to buy on the dip.