US market review: Bull market celebrates its tenth birthday

The US bull market became the longest bull market in the history of the S&P 500 Index during March, celebrating its ten-year anniversary on 9 March. Nevertheless, optimism amongst investors has been dampened by uncertainty surrounding the US/China trade dispute – which ended March unresolved – and concerns over the outlook for economic growth. 

  • US interest rates are not expected to rise at all this year
  • The Fed will slow the pace of its balance-sheet reduction
  • President Trump issued his first-ever Presidential veto

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The US bull market became the longest bull market in the history of the S&P 500 Index during March, celebrating its ten-year anniversary on 9 March. According to S&P Dow Jones Indices, the consumer discretionary sector has led the bull market over the decade, followed by information technology; at the other end of the performance spectrum, energy proved to be the weakest sector over the period.

“The S&P 500 Index posted its best first-quarter return since 1998”

The S&P 500 Index posted its best first-quarter return since 1998, rising by 13.1% over the period, although much of this uplift was attributable to its strong performance in January. Optimism amongst investors has been dampened by uncertainty surrounding the US/China trade dispute – which ended March unresolved – and concerns over the outlook for economic growth. 

Over March as a whole, the S&P 500 Index rose by 1.8%, the Nasdaq Index climbed by 2.6%, and the Dow Jones Industrial Average Index ended the month broadly unchanged. The best-performing sectors in the S&P 500 Index during March were Information Technology, Real Estate, and Consumer Discretionary; in comparison, Financials and Industrials both delivered a negative performance. Meanwhile, as the fourth-quarter earnings season drew to a close, 68% of companies beat earnings expectations, 25% missed expectations, and 7% met expectations.

US interest rates appear unlikely to rise during 2019 against a backdrop of slowing economic growth. The Federal Reserve (Fed) trimmed its economic growth forecast from 2.3% to 2.1% this year, and from 2% to 1.9% next year, warning: “Growth of economic activity has slowed from its solid rate in the fourth quarter”. Policymakers at the central bank now predict no upward movement in 2019 – in contrast to December’s forecast of two increases – and only one increase in 2020. 

The Fed reported that “recent indicators point to slower growth of household spending and business fixed investment in the first quarter” , and Fed Chair Jerome Powell warned: “It may be some time before the outlook for jobs and inflation calls clearly for a change in policy”. The Fed also intends to slow the pace of its balance-sheet reduction from US$30 billion per month to US$15 billion from May until September.

Elsewhere, in the ongoing saga of the US/Mexico border wall, President Donald Trump issued his first-ever Presidential veto to prevent his declaration of a national emergency from being overridden by US lawmakers. 


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