What happened in March?

Equities advanced in early March but concerns over rising interest rates, global trade tensions, and a selloff in the technology sector stunted the rally and turned major stock indexes negative for the month. The S&P 500 Index posted a quarterly loss for the first time since Q3 2015. The Federal Reserve increasing their target interest rate in late March was largely priced into the market, however continually positive economic data had investors betting on a more aggressive schedule of rate increases in the coming years. U.S. tariffs and trade policies rattled the market with speculation of shrinking profit margins for multinational companies and material producers that rely on aluminum and steel imports. However, subsequent negotiations did help to quell some concerns. Growing controversy regarding Facebook’s handling of user data raised questions over possible increased regulation in the technology sector. As a result, the high-flying sector, which accounted for almost 25% of the S&P 500’s market value, drove the overall market lower.

Across the globe, European stocks rallied in the final week of the month to get back to relatively flat and Asian markets saw less of an impact from U.S. technology stocks’ decline, although trade tensions with the U.S. weighed on the Pacific region.

March by the numbers:

U.S. Euities | S&P 500: -2.6%     

International Equities | ACWI ex-U.S.: -1.8%

U.S. Bonds | Barclays U.S. Aggregate Bond Index: +0.6%

Global Bonds | JP Morgan Global Aggregate Bond Index: +1.2%

Moving into April

The first quarter saw a large increase in market volatility and surprising headline risk. However, outlook for near-term market growth remains positive. Beneath the headlines, fundamentals remain strong with the U.S. and global economies expected to expand along with corporate earnings. Aided by rebounding producer and consumer survey results and long-term market momentum, the majority of macroeconomic, sentiment, technical and valuation indicators remain positive. We enter April 91% invested in our domestic tactical strategies and 83% invested in our international tactical strategies.