U.S. stocks continued their march higher during 2017’s first quarter. The S&P 500, an index tracking the 500 biggest companies traded on US stock markets, was up over 6% in the quarter, and is up more than 17% over the past 12 months (including the reinvestment of dividends).
U.S. equity markets pushed broadly higher in Q4 and for calendar 2016, boosted by investor optimism that President-elect Trump’s administration will usher in a wave of business-friendly initiatives including reduced government regulation and lower corporate tax rates.
In economic news, it was pretty much more of the same. The US economy continued to grow at a tortoise pace during the 3rd quarter. On a positive note, wage growth is accelerating and residential real estate values continue to increase around the country, which bodes well for the future.
With the benefit of a month’s hindsight, market fallout from the Brexit campaign appears surprisingly short-lived, particularly in the U.S. Following a brief selloff in the few days following the June 23rd vote, the S&P 500 rallied over 8% in the next few weeks, hitting a fresh all-time high by early July. European equities, while still modestly negative for the year, also regained much of the ground lost after the Brexit vote.
Following a steep correction over the first six weeks of 2016 (which saw the S&P 500 decline 12% from its recent peak, hitting a fresh 52-week low), equity markets rebounded in late February and March, with domestic market indexes finishing the quarter up nearly from where they had started.
During the fourth quarter, global equity markets recovered from a sell-off in Q3, though the impact was modest (and from today’s vantage point, short-lived). The S&P 500 index rebounded 7% during Q4, yet barely eked out a positive return for the full year (+1.4% including dividends, the index’s worst performance since 2008).