Interesting month, we had the Fed raise rates for the second time in about four months. What’s so interesting about that is now we have seen the Fed raise interest rates by 0.5% and since that’s happened we’ve actually seen the yield on the 10 Year Treasury drop from 2.6% down to 2.35%. We’ll get into more about why that happened below and in the video.
The month of March was not a fabulous month for the overall markets, there were some clear winners and losers, we’ll take a closer look at those now.
Indices Performance for March and 2017
Let’s start with the major indices for the month of March. The only major index that was positive was the NASDAQ 100 index as you can see positive by 1.26%. If we go down to the S&P 500 we see that it’s down 0.83% in March, and the Dow Jones Industrial Average is the clear loser for the month down 1.5%.
If we take a look year-to-date (YTD), the small cap sector, especially the S&P 600 SmallCap is actually negative YTD by -0.31%, the biggest winner overall for the year is the NASDAQ 100 up 9.52%, the S&P 500 up by 4.13%, and the Dow Jones Industrial Average up by 3.82%. So we’re seeing good positive movement across the board. We did see a bit of a pause in the month of March, and I believe that pause is mainly due to the American Health Care Act not being passed and some doubts from the market as to whether or not Trump will be able to get his economic and tax agenda pushed through the House and the Senate.
Sector Performance for March and 2017
Let’s take a quick look at the different sectors. As you can see here Consumer Discretionary for the month of March was the clear winner higher by 1.42% with Financials and Energy lagging down -3.12% and -4.24% respectively.
On the year, we have the Technology sector really following with that NASDAQ 100, Technology up by 10.24% YTD, followed by Consumer Discretionary, Health Care, and Utilities. The clear loser so far this year has been Energy down -7.2% YTD. Financial and Real Estate are also lagging behind, up 2.06% and 2.76% respectively.
Bonds for March and 2017
Let’s look at bonds. What you’re looking at here is the Vanguard Total Bond Market ETF called BND, on the year positive by 0.77%. As you can see, the month of March was actually a decent month for bonds.
You see the beginning of the month where the bonds fell off, this was due to the original interest rate hike by the Fed. Then the interest rates on the 10 Year Treasury actually reverted back and started falling again so bonds recovered much of what they had lost in the early part of the month. Now remember this is high quality investment grade bonds, by and large.
If we compare that to a more diversified bond fund, we wind up seeing a different story. Year-to-date, we see the PIMCO income fund up 2.37% versus the 0.77% of the BND. The reason that’s the case is that the PIMCO income fund is actually set to accept the rising interest rate environment with high yields, floating rate bonds, and investment grade bonds. So it’s a much more diversified fund.
I’m showing this one particular fund because many of the portfolios that we manage actually have a makeup of these different components. Remember, bonds should be a part of your portfolios during rising interest rate environments as well as falling interest rate environments, and all bonds are not created equally. I encourage you to talk to your advisor about the underlying fixed income exposure you have inside of your portfolio, why it’s there, and what it’s doing.
Thank you so much for joining me for this Monthly Economic Update. As always, any questions you have for myself or any of our advisors please give us a call at 913-393-1000. We’re always more than willing and happy to talk to you.
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