Posted March 31, 2017

Backing and Filling

In other parts of the country March comes in like a lion and goes out like a lamb, but on Wall Street it has historically been a month of average performance as investors focus turns to getting their taxes done.  The market has been pushing steadily higher since the election on optimism about Trump’s growth oriented policies and that rally continued in early March.  In the middle of the month declining oil prices started to cause concern, but unlike last year, when a drop in oil prices would send the market reeling, the drop during March simply slowed some of the enthusiasm for stocks.  Oil prices did end the month 7% lower, but after an initial sell off, the market stabilized, but the S&P 500 did finish the month with a 1 point loss that ended its 4th month win streak. The widely followed index is still up 5.5% for the year.
The month got off to a strong start following Trump’s speech to Congress, which was well received by most investors.  March 1st was the day following the speech and the Dow jumped 300 points, its best performance thus far in 2017. The gain was not only the first 1% move in 55 trading days, but it pushed the Dow above 21,000, just 5 weeks after hitting 20,000 for the first time.  The second day of the month saw profit taking in the financial stocks that sent the Dow down 112 points, and the first 3 trading days of March ended with the S&P 500 +.8%.  The first full week of the month saw declining oil prices putting pressure on the major indices and the market traded lower 4 of the 5 days, finishing the week down .5% and ending a 5 week winning streak.  During the second full week of the month the market continued to follow oil which rebounded, at weeks end the S&P 500 had gained .3%.  After having the best day of 2017 early in the month, the market had its worst day of 2017 on the 21st on concerns the healthcare bill, and possibly Trumps entire agenda, were in trouble. The Dow lost 237 points that day and, at weeks end the President instructed Congressional Republicans to pull the healthcare bill.  The S&P 500 ended the week down 1.4%. This week we learned Republican Congressmen are still working on a healthcare bill and that was good for an early week 150 point rally that ended an 8 day losing streak.  The last week of the month saw portfolio managers make last minute adjustments ahead of tonight’s printing of quarterly statements.
April is traditionally one of the best months of the year for the market as money flows into retirement accounts before the tax filing deadline. We expect the market focus will continue to be on the Trump agenda.  Trump’s ideas are clearly pro-growth which would be beneficial to economic growth and the stock market, but getting things done with the current Congress is challenging.  A stall in the Trump agenda would be a risk for the market.  The markets continue to be richly valued, but every dip has found buyers as money continues to pour into our markets since the election. As we have said for a couple of months, we would not be surprised to see a 5%-10% pull back but we will be buyers on that weakness.
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