Page 25 - aruba-today-20190330

BUSINESS Saturday 30 March 2019
A25

1Q Market Review: Great returns, but with a twist at the end

By STAN CHOE ket Index fund, the largest
NEW YORK (AP) — It's been bond fund by assets, has
a fabulous start to the year returned 2.8 percent and is
for investors — as long as on track for its best quarter
you ignore all those simmer- in three years.
ing worries about a possible The Fed's patient stance
recession. was particularly helpful for
S&P 500 index funds are funds that focus on short-
on pace to close out their term bonds, whose prices
best quarter in seven years, are more dependent on
having returned nearly 12.5 the central bank's moves
percent in 2019 through than longer-term bonds.
Wednesday, and many The average short-term
other investments from junk bond fund has returned 1.8
bonds to foreign stocks percent through Wednes-
have also bounced back day, according to Morning-
from their dismal end to star. That's more than triple
2018. But the returns would the return in any of the prior
have been even better if seven quarters.
not for concerns that slow- — WHAT'S AHEAD?
ing growth around the Like the global economy,
world may drag down the growth is also slowing for
U.S. economy. U.S. corporate earnings.
The quarter's twists are just Analysts say first-quarter
the latest for the markets, In this March 7, 2019, file photo specialist Matthew Grenier works on the floor of the New York profits likely fell nearly 4
which have yo-yoed from Stock Exchange. percent from a year ear-
record heights to fear- Associated Press lier, according to FactSet. If
induced sell-offs for more they're right, it would be the
than a year. would be flexible in decid- year or two. er financial stocks, which first decline in nearly three
The big swings have left ing when to raise rates. It Here's a look at some of the lagged during the quarter years. That's setting the
stock and bonds looking was an immediate balm for moves that shaped the last on worries that lower inter- stage for some potentially
fairly valued, said Frances investors, and the S&P 500 quarter for investments: est rates and slower econo- disappointing reports when
Donald, head of mac- leaped 3.4 percent that — STOCK FUNDS SOARED my will hurt their profits. the next quarter opens on
roeconomics strategy at day. It kept climbing until During the fourth-quarter — BOND FUNDS CLIMBED April 1.
Manulife Asset Manage- hitting a peak on March 21, swoon the S&P 500 fell as AS YIELDS FELL So, investors may want
ment. She's optimistic mar- the day after the Fed said much as 19.8 percent from Inflation is still low, the Fed is to ready themselves for
kets can keep climbing this that it may not raise rates at its all-time high set Sept. 20. holding the line on interest even more turbulence in
year, but she anticipates all this year. The Fed's pledge for pa- rates and worries are rising the coming quarter. Be-
more swings along the All the while, companies tience helped the index about the strength of the sides earnings reports,
way. When she talks with were turning in yet another rally back to within 2.6 per- economy. All those help they'll also be getting more
big institutional investors, round of blockbuster profit cent of the peak this quar- push up prices for bonds, clues about the strength of
the mood is usually one of reports aided by lower tax- ter. and pull yields down, and the global economy and
nervousness, she says. es. Earnings per share for Technology stocks again bond funds of all types whether the United States
"The 2020 recession calls, S&P 500 companies surged did much of the work, powered to gains during and China can make prog-
whether they're right or 13 percent during the last but the gains were wide- the quarter. ress on their trade dispute to
wrong, have permeated all three months of 2018 from spread. Funds specializ- Vanguard's Total Bond Mar- help the global outlook.q
individual investor mentali- a year earlier, led by big ing in small stocks or large,
ties," she said. gains for energy and com- energy companies or real
The Fed was again one of munications companies. estate, all logged gains. US consumer spending
the market's main drivers, But the momentum for The largest mutual fund by
and it flipped to hero from stocks stalled last week assets, Vanguard's Total edges up weak 0.1
antagonist in the eyes of when a surprisingly weak Stock Market Index fund re-
many investors. report on the European turned 12.8 percent for the percent in January
As last year was closing, in- economy and other worries quarter through Wednes-
vestors were worried that triggered concerns about day, on pace for its best
the Federal Reserve would the global economy. In- performance since a 12.9 By MARTIN CRUTSINGER ber that represented the
raise interest rates too vestors sought the safety of percent return at the start WASHINGTON (AP) — biggest one-month drop
quickly and choke off the bonds, and that in turn trig- of 2012. U.S. consumer spending in more than nine years.
economy. The central bank gered the alarm on one of Stock funds that focus on edged up a tiny 0.1 per- The 0.2 percent rise in in-
raised short-term rates in the market's more reliable high-growth companies, cent in January, while comes in February came
December for the seventh recession indicators. such as tech, again easily incomes advanced a after a 0.1 percent drop in
time in two years, and the Investors drove the yield for bested their counterparts modest 0.2 percent in incomes in January.
S&P 500 fell more than 19 the 10-year Treasury lower that look for low-priced February, further evi- Many analysts believe
percent from late Septem- than for the three-month stocks, called value funds. dence that economic ac- the economy has en-
ber through Dec. 24, nearly Treasury bill for the first time The average mid-cap tivity may have deceler- tered a soft patch and
taking down the longest since a little before the growth stock fund returned ated after strong growth that growth is significantly
bull market for U.S. stocks Great Recession. Such an 16.3 percent, for example, for most of last year. slower in the current quar-
on record. "inverted yield curve" does versus 12 percent for mid- The Commerce Depart- ter. The U.S. faces vari-
But on Jan. 4, Fed Chair- not have a perfect track cap value funds. ment says the weak gain ous headwinds, including
man Jerome Powell told record as a recession pre- Value stock funds trailed in consumer spending in weakness overseas and
a conference for econo- dictor, but it has preceded partly because they often January followed a 0.6 the waning effects of the
mists that the central bank each of the last seven by a have lots of banks and oth- percent plunge in Decem- 2017 tax cuts.q