The S&P 500 Index finished the quarter with a total return of -0.76% while the Dow Jones Industrial Average lost -1.96%. The Nasdaq Composite finished in the green with a return of 2.59% for the quarter. Nine of the eleven sectors in the S&P 500 posted negative returns during the period. Telecommunication and Consumer Staples were the biggest losers with returns of -7.48% and -7.12%, respectively. Small-cap stocks outperformed mid-cap stocks, which beat large-cap names but all were in the red. Specifically, the Russell 2000 Index’s -0.08% loss did better than Russell mid-cap Index and the Russell 1000 Index which posted losses of -0.46% and -0.69%, respectively for the quarter. Growth stocks beat their value counterparts, as the Russell 1000 Growth Index rose 1.41% compared to the -2.83% loss of the Russell 1000 Value Index over the same period. Stocks marginally outperformed bonds, with the Barclays Aggregate underperforming most equity benchmarks, with a -1.46% loss. Long-dated US Treasuries underperformed, with the Barclays Long-Term Treasury Index declining -3.36%. The US Dollar Index declined -2.3% for the quarter while oil and gold rose 7.5% and 0.7%, respectively.
The year started off with the best January performance since 1997, but reversed quickly with pundits attributing the selloff to inflationary fears sparked by a strong January jobs report and higher rates. The Trump Administration continued to shake up trade policy by implementing steel and aluminum tariffs in March, while also announcing its plan for new tariffs on up to $60B in Chinese imports. In retaliation to the steel tariffs, China has announced tariffs as high as 25 percent on imports of 128 American-made products, increasing fears of an impending trade war. President Trump surprised the nation by agreeing to meet with North Korean leader Kim Jong Un, but there are no confirmed details. Russian President Vladimir Putin won reelection, while the Italian elections resulted in a “hung parliament” with no particular party attaining the majority of votes. German Chancellor Angela Merkel finally reached a deal to form a coalition with the Social Democrats. The White House continued to be under pressure from scandals related to Russian meddling in the elections, the President’s personal affairs, as well as large departures from both firings and resignations. Jerome Powell took over as the new Fed Chairman in February and raised the benchmark interest rate at the March meeting by 0.25% to a range of 1.5% to 1.75% while the ECB has left interest rates unchanged so far this year.
The views expressed in this commentary reflect those of Miller Value Partners analysts as of the date of the commentary. Any views are subject to change at any time based on market or other conditions, and Miller Value Partners disclaims any responsibility to update such views. The information presented should not be considered a recommendation to purchase or sell any security and should not be relied upon as investment advice. It should not be assumed that any purchase or sale decisions will be profitable or will equal the performance of any security mentioned. Past performance is no guarantee of future results.
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