The S&P 500 Index finished the quarter with a total return of 13.7% while the Dow Jones Industrial Average gained 11.8% and the Nasdaq Composite finished the quarter up the most at 16.8%. All eleven sectors in the S&P 500 posted positive returns during the period. Information Technology and Real Estate were the biggest winners with returns of 19.9% and 17.5%, respectively. Mid-cap stocks outperformed small-cap stocks, which beat large-cap names, but all were up for the quarter. Specifically, the Russell Mid-Cap Index’s 16.5% gain did better than the Russell 2000 Index and the Russell 1000 Index which posted gains of 14.6% and 14.0%, respectively for the quarter. Growth stocks beat their value counterparts, as the Russell 1000 Growth Index rose 16.1% compared to the 11.9% gain of the Russell 1000 Value Index over the same period. Stocks drastically outperformed bonds, with the Barclays Aggregate and the Barclays Long-Term Treasury Index posting 2.9% and 4.7% gains respectively. The US Dollar Index gained 1.2% for the quarter while gold gained 0.3%. Oil gained over the period up 32.4% due to supply concerns.
Despite starting the year off with the longest government shut down in history lasting 35 days, the markets took off. Coming off of the worst quarterly performance in 4Q since 2011, the stock market rebounded, returning the best quarterly performance since 2009. The market reacted well to a more dovish Fed that chose to hold rates steady and reduced their projected interest-rate hikes to zero for the year, down from two previously. The Fed also announced their decision to end their balance sheet reduction program by September. March was a little choppier than January and February with the US 3m-10yr yield curve briefly inverted in March (the first time since 2007) sparking fears of a pending recession. North Korea’s Kim Jong Un met with President Trump in Vietnam in February, but the meeting was cut short and no agreement was reached. China and US trade negotiations have continued to progress with discussions continuing on the final 10% of the deal. No progress has been made on Brexit negations as lawmakers have failed repeatedly to agree on the terms under which the U.K. should leave the bloc. The Attorney General, William Barr, released a letter summarizing the major conclusions in the Mueller report noting that Mueller did not find evidence that the Trump campaign had conspired with Russia to impact the election; however, Mueller did not take a position on whether Trump had obstructed justice.
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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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