Wall Street Sees Best Quarter In A Decade: 5 Winners
Zacks Investment Research | Mar 31, 2019 09:22PM ET
Wall Street posted its strongest quarterly rise in a decade, with the broader S&P 500 index rising 13.1%, marking its best start to a year since 1998. The index also successfully notched its biggest one-quarter gain since the end of the Great Recession.
But, it’s just not the S&P 500 that started off well this year. Other major bourses, including the Dow Jones Industrial Average, Nasdaq Composite and the Russell 2000 index of small-cap stocks, surged more than 11%. The indexes recouped the losses incurred in the final months of 2018, when fears of a global recession sent markets across the globe sliding.
What Led the Gains?
The first-quarter gains were predominantly led by a sharp rebound from the Christmas Eve lows, Fed’s patient stance with interest rates hikes as global growth slows and increasing optimism in U.S.-China trade negotiations.
The Fed’s latest comment that the rate increases are on a pause is of utmost significance. This dovish stance certainly helped the broader market chug along in the first quarter. The Fed confirmed that it would be “patient” with future rate hikes and has also indicated that the unwinding of the asset portfolio might conclude sooner than expected.
Such views were widely considered as accommodative measures, at least for the time being, and have had a soothing effect on investors. After all, the Fed’s rate increase last year has taken a toll. This is because hike in rates increases the cost of lending money from financial institutions for small and medium business houses. This in turn could exert more pressure on the U.S. economy that is on the cusp of a slowdown this year.
On the political side, both U.S. and Chinese trade officials have begun talks to bring an end to their prolonged trade dispute. These economies imposed billions of dollars of tariffs on each others’ goods over the past year, battering equity markets, souring business and consumer sentiment as well as hampering economic growth.
Also, stocks bounced back in the first quarter as rise in oil prices eased worries about global economic growth, fourth-quarter earnings coming in better-than-expected and China, itself, taking enough steps to stimulate its economy.
The U.S. oil price benchmark, West Texas Intermediate, climbed 32% during the first quarter to nearly $60 a barrel. The Trump administration’s unexpected move to grant waivers to most of Iran’s buyer resulted in more oil than needed, leading to a plunge in oil prices. But, OPEC’s policy shift to quickly reduce supplies rebalanced the oil market and helped oil prices increase.
Coming to the fourth-quarter earnings report, total earnings growth for the S&P 500 index came in at 13.4%, showing a quarterly growth pace that was roughly double the pace in the first three quarters of the year (Read more: Original post
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