Lindsey Report – March

The S&P 500 began the month at 1940 and ended the month at 1932 – a modest retreat. The Nasdaq fell a little over 1% while the Dow squeaked out a minor gain (AP).  By that account, one might presume that it was a lackluster month in the markets: nothing could be further from the truth.

By the end of January, the markets had bounced off their mid-month lows; however, they began another retreat to start February. By 2/11, the Dow, S&P 500 and Nasdaq had all fallen below their January lows with each being down more than 15% from their May ’15 highs (AP).  Like in January, the markets bounced off their lows, recouping most of the month’s early losses.

Therefore, the erratic start to 2016 continues. It is too early to tell if this bounce represents a meaningful change in sentiment or just a “relief” rally, but these big swings suggest that the markets are looking for more clarity on the economy.  Nonetheless, I’m pleased to again see 17,000 on the Dow, no matter what the reason (AP).

Regarding the health of the economy, there are persistent concerns: will we continue on this path of slow growth, pick up steam or dip into recession. There is a lack of conviction at this point and the recent GDP report did not clarify.  The Commerce Department reported that the domestic economy grew at a paltry 1% pace in the 4th quarter of 2015 (Bloomberg).

Since the Great Recession, the economy has yet to gain significant traction, as growth has averaged about 2% ever since. To put this in perspective, in a healthy economy, growth rates should consistently be north of 3%, if not 4%.  As a reference, since 1947, growth in the U.S. has averaged 3.24%, which includes recessionary/negative growth periods (Trading Economics).

Due to the sluggish economy, I anticipate continued market volatility in the coming months until we get more clarity. However, a positive sign was today’s jobs report (3/4), which showed we added 242k jobs in February (CNN).  We still need more positive news, but it’s a start.

 

 

 

The opinions voiced are for informational purposes only and are not intended to provide specific advice to any individual. To determine which investments are appropriate for you, consult myself prior to investing. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.  The economic forecasts set forth in this commentary may not develop as predicted and there can be no guarantees that strategies promoted will be successful.

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