Streak Of 9 Positive Quarters Is Snapped

There were many record winning streaks snapped by the correction in February. With the weakness in March combined with the February decline, the market had its first down quarter since 2015 as the S&P 500 fell 1.22%. The Wall Street phrase “the easy money has been made” is a great description for the 2018 market. Stocks may end the year with gains, but they won’t come easy because of the increased volatility. This is mainly stemming from the weakening global economy. Earnings growth will be in the teens, but that’s mostly because of the tax cuts. The economic growth is the biggest wild card for earnings growth. A weak economy means some slight negative revisions are coming. Double digit earnings growth probably won’t be coming in 2019 with the Fed hiking rates at a quicker pace. The multiple expansion that investors had been accustomed to in the past few years has turned against them as the market has seen multiple compression. Without euphoric momentum, there’s no reason for multiples to increase near the end of an expansion.

Tech Stocks Up On A Window Dressing Rally

Stocks ended the quarter on a positive note as the S&P 500 was up 1.39% and the VIX was down 12.68% to 19.97. End of the quarter window dressing may have occurred as the FANG stocks were up big. Nvidia was up 4.6%; Facebook was up 4.4%; and Netflix was up 3.35%. Tesla was up 3.24% during the normal trading hours, but after hours it fell because the firm did a voluntary recall of 123,000 Model S cars built before April 2016 because of faulty power bolts which have seen excessive corrosion. This story is terrible news for the firm which has already been reeling due to missed production targets for the Model 3. The main cause for concern is the investment community turning on the firm. If consumers lose faith because of recalls, the firm will be crushed. The company is dealing from a position of weakness.

S&P 500 Still Above The 200 Day Moving Average