Quarterly Market Recap – Q1 2015

Volatility continued to rule the domestic equities markets. After losing ground in January, the major indices had a strong February. March saw early losses, then solid gains, with the Dow industrials, S&P 500, and Russell 2000 all hitting closing highs, and the Nasdaq closing above 5000 for the first time in 15 years, just shy of its all-time high. But these gains were tempered by a late-month downturn, with all the major indices losing ground in five of the last seven trading days as investors, jittery about corporate earnings, took profits. The small caps of the Russell 2000, which are seen as having less international exposure, saw March’s only gains, and also led all indices for the quarter, up almost 4% with the Nasdaq right behind at 3.5%. The S&P and Global Dow trailed, up .4% and .7% respectively, while the Dow industrials slipped into negative territory for the year.

The Fed’s slower-than-expected approach to interest rate hikes caused a sharp but temporary drop in the U.S. dollar, which continued to gain strength during the quarter against the currencies of its major trading partners. While a strengthening dollar was good news for Americans traveling abroad last quarter, it added to investor angst because of the potentially adverse effects on the global profits of U.S. multinational corporations. In January, the benchmark 10-year Treasury note dropped below 2% for the first time since May 2013, with demand driving yields to as low as 1.68% that month, before stabilizing to end the quarter just under 2%.

Oil prices fell below $50 a barrel during the quarter, but that seemed to be a mixed blessing. Lower gas prices boosted consumers’ spending power, but the sharp declines also raised questions about whether prices would fall so far that energy companies would cut back on jobs and/or ongoing operations. Even escalating tensions in the Middle East caused only a temporary spike back over $50, with U.S. spot crude prices closing the quarter under $48 a barrel, due to concerns that lifting sanctions against Iran could cause an increase in already abundant oil supplies. Gold, meanwhile, despite spiking to $1,300 in late January, finished the quarter almost exactly where it started, at roughly $1,183 an ounce.

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

source: Broadridge