Whimpering Finish Caps Best Quarter for U.S. Equities Since 2015

Written by
Lu Wang
Written by

Lu Wang

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(Bloomberg) -- Its last day may have been a washout, but the first quarter just took its place among the best of the lengthening bull run for U.S. stocks.

Even with a 0.2 percent decline Friday, the S&P 500 Index surged 5.5 percent in the three months ended March 31, the biggest advance since shares jumped 6.5 percent at the end of 2015. More than 350 companies rose in the quarter as gains that began just before Election Day swelled to 14 percent.

While equities have lost the momentum of February, when investors anticipating President Donald Trump growth programs pushed the S&P 500 higher for six straight weeks, March's final five sessions still notched the best return since Valentine's week. Energy producers led the advance, rallying 2.2 percent for the biggest increase since early December while consumer stocks, commodity companies tech shares each climbed more than 1 percent.

March just missed becoming the fifth consecutive up month for equities, a span that encompasses the entirety of the Trump bump that has reinvigorated the rally that turned eight years old on March 9. Equities are jumping as corporate earnings bounce back and investors pour money into shares in anticipation of Trump promises including lower taxes and greater public spending.

“Confidence returns not only to the stock market, but also to the economy,” Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird, said in an interview on Bloomberg Television. “The carrot is still out there, with the carrot being tax reform and infrastructure spending. Till those things come to the forefront, it's still buy the rumor.”

Friday's session reprised a pattern that has held for more than a month in which a week's final hour saw exaggerated volatility, this time to the downside. The S&P 500 erased a gain in the session's last 30 minutes. Banks and energy companies paced the retreat, offsetting gains in real-estate trusts and utilities that came as Treasury yields slipped. Also today:

FMC Corp. rose 13 percent, the most in the S&P 500. The pesticide maker agreed to acquire DuPont Co.'s crop-protection assets and DuPont agreed to acquire FMC's health and nutrition business.
The Dow Jones Industrial Average fell 0.3 percent to 20,663.22, trimming its advance since January to 4.6 percent.
Russell 2000 Index rose for a seventh day, the longest streak since November. It has now completed the retracement of all its losses from March 21, when concern began to build that President Donald Trump's health-care bill might falter.
Nasdaq Composite Index was little changed on Friday. Up 9.8 percent, the tech-heavy gauge posted the best quarter since 2013
CBOE VIX Index rose 7.2 percent, trimming its weekly loss to 4.6 percent
ECONOMY:
- U.S. consumer spending rose less than forecast in February even as wage growth improved, according to government data that also showed inflation reached the Federal Reserve's goal for the first time in almost five years.
- Fed New York President William Dudley said the central bank's median forecast for three rate hikes this year “is in a reasonable place” but the number could be a little bit more, or a little bit less, depending on how the economy performs.
EARNINGS (S&P 500):
- None until April 4
- European stocks rose for a fourth day, with the Stoxx Europe 600 Index adding 0.2 percent. The index rounded out its longest run of quarterly gains since 2014, rising 5.5 percent, as a chorus of strategists and investors say the reflation rally in Europe has more to go, boosted by those seeking sanctuary from lofty U.S. stock valuations.