US Markets

Stock prices finished the month higher despite a volatile domestic bond market and several poor economic reports.

The Dow Jones Industrial Average rose 0.05 percent, while the Standard & Poor’s 500 Index gained 1.79 percent. The NASDAQ Composite led the major indices, climbing 2.61 percent.

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As the month opened, stock prices fell due to waning optimism on U.S.-China trade talks and a troubling employment report.

Trading Signals

Market sentiment improved as the month progressed on, raising hope that a trade agreement might be reached. Chinese officials reassured negotiators that they would not use currency devaluation as leverage in the ongoing trade dispute.

The market moved higher still, led by a renewed enthusiasm for technology companies. A rebound in retail sales helped offset some of the other disappointing economic news.

The Fed’s Plan

Stock prices continued their advance in mid-March after Fed Chair Jerome Powell said that no more rate hikes were planned for this year.2 But in the following days, stocks staged a broad retreat on a weak manufacturing report out of Germany, which reignited fears of a global economic slowdown.

Stocks drifted higher in the final week as prices fluctuating in the wake of declining bond yields. Were the falling yields signaling an economic slowdown or merely a function of recent monetary easing by central banks? Optimism prevailed with stocks closing higher for the week, putting an exclamation point on a solid first-quarter performance.

Sector Scorecard

The majority of industry sectors finished higher this month, with gains in Communication Services (+1.63 percent), Consumer Discretionary (+2.77 percent), Consumer Staples (+2.58 percent), Energy (+1.49 percent), Real Estate (+4.38 percent), Technology (+3.42 percent), and Utilities (+1.49 percent), while Financials (-3.32 percent), Health Care (-1.08 percent), Industrials (-2.76 percent), and Materials (-0.05 percent) fell in value. 

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What Investors May Be Talking About in May

Lyft, Inc., one of the pioneers of the ride-sharing industry, closed on its initial public offering (IPO) on Friday, March 29th, kicking off what may be a big year for IPOs. Up to 226 private companies have started the process of going public, including several well-known names, such as Uber and Airbnb.4

IPO offerings were slowed by the partial federal government shutdown this year. The shutdown prevented the Securities and Exchange Commission from performing the necessary regulatory reviews.

Watch IPO Activity

The IPO calendar indicates different things to different investors. One perspective is that a large number of IPOs may be a signal of a market top. On the other hand, it may mean that the risk appetite of investors has returned, which may be a healthy signal for the financial markets.

It’s impossible to know which is the more accurate view. Should some big-name IPOs stumble, it may not only deter other companies from their own public offerings, but it may affect market psychology. Conversely, an enthusiastic reception of these IPOs may serve to underpin further market advances.

World Markets

International equities were mixed in March, thanks to economic weakness in both Europe and Asia. The MSCI-EAFE Index slipped 0.42 percent.5

European markets were mostly higher, with Germany gaining 1.4 percent and France picking up 2.1 percent.6

Stocks in the Pacific Rim countries were mixed, with Australia climbing 0.2 percent and Japan dropping 0.8 percent.

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