market attributes: u.s. equities march 2019 · the plane!” was the call from fantasy budget...

Market Attributes

U.S. Equities March 2019 KEY HIGHLIGHTS

The S&P 500® was up 1.79% in March, bringing its YTD return to 13.07%.

The Dow Jones Industrial Average® gained 0.05% for the month and rose 11.15% YTD.

The S&P MidCap 400® fell 0.74% for the month and was up 14.02% YTD.

The S&P SmallCap 600® returned -3.53% in March and 11.17% YTD.

Source: S&P Dow Jones Indices LLC. Data as of March 29, 2019. Past performance is no guarantee of future results. Table is provided for illustrative purposes. Returns shown are price returns.

MARKET SNAPSHOT

As 2018 ended, the bear was about to strike, the quarter had fallen 13.97%, interest rates were headed

for a Jimmy Carter reunion (well, maybe not quite that high), earnings were expected to tank, and the

economy was so shaky that recession became the whisper number. Three months later, the bear is in

hibernation with the bull: the S&P 500 was 3.29% short of a new high, Q1 2019 rebounded 13.07% (the

best quarterly return since Q2 2009’s 14.98% and the best first quarter since 1998’s 13.53%), interest

rates have fallen off their curve in both directions—but stayed positive in the U.S. (2.41% for the 10-

year)—a single-digit earnings growth has been accepted for now (subject to April’s results and

guidance, which are needed to support the P/Es that are still high), and the economy, while slow,

continues on.

While the facts have changed, it was perception that killed the beast, as there was nothing to fear in Q4

2018 but fear itself; meanwhile, Q1 2019’s fears are earnings and more signs of a slowdown. The

difference between one rate increase and none is, well, 0.25%—not exactly a mortgage killer, and

mortgage rates have declined. Earnings and cash flow continued, maybe not at record pace or level,

but enough to support operations, with new records for both buybacks and capital expenditures.

Washington’s partial management change in January 2019 changed the rhetoric (and will have an

Exhibit 1: Index Returns

INDEX 1-MONTH (%) YTD (%) 1-YEAR (%) 2-YEAR (%)

S&P 500 1.79 13.07 7.33 19.96

Dow Jones Industrial Average 0.05 11.15 7.57 25.48

S&P MidCap 400 -0.74 14.02 0.93 10.27

S&P SmallCap 600 -3.53 11.17 0.09 11.27

Contributor:

Howard Silverblatt, Index Investment Strategy, Senior Industry Analyst, [email protected]

S&P Dow Jones Indices’ Market Attributes® series provides market commentary highlighting developments across various asset classes.

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U.S. Equities March 2019

MARKET ATTRIBUTES 2

impact, eventually), but it has not changed the facts as of yet. Thoughts of a recession, which may

have been premature to begin with, have left the building for Europe, where stimulus is alive and

growing, and separation and “no votes” remain a major issue. Unchanging were the continuing tariff

talks, as the U.S. is “over there” now for new and different talks, with China “over here” in the first week

of April) with the meeting between U.S. President Trump and Chinese President Xi Jinping meeting

always appearing to be 20 minutes in the future.

The fun talk and month-end trades surrounded the IPO hibernation exit, as they got a Lyft (LYFT; which

did its IPO the last day of March) from a planned USD 62-USD 68 offering up to USD 72; the issue

closed at USD 78.29, valuing its potential worth (since its earnings are in the red) at USD 26 billion.

That talk (and trade) is expected to continue the ride, as Uber, valued at USD 120 billion (also in the

red for earnings), is expected to do an IPO in April. Other almost household names, such as office

space and services provider WeWorks and image-sharing social media company Pinterest, are lined up

at the public trough. Denim company Levi Strauss (LEVI), which is 166 years old, went public for the

second time (IPOed in 1971, taken private in 1985) via a USD 17 IPO (priced at USD 14-USD 16),

valuing the company at USD 6.2 billion.

The real fun trades for April are expected to surround earnings, as the now-accepted high single-digit

growth rate for 2019 (9.1%) is put to the test via actual Q1 2019 results (that is, if the numbers tell the

truth) and guidance. P/Es (on real earnings, not proformas) remain on the high side (17.1 on the 2019

estimate), and the Street will need to justify the current multiple. While estimates have declined (Q1

estimates were down 7.1% from year-end 2018), lightning striking twice is rare (Q4 2018 estimates

declined significantly, as the lower results mostly beat and were accepted). The bottom line is the S&P

500 is 3.93% away from a new high and needs reassurance, with real earnings results being the best.

The S&P 500 continued on a roll, as it posted a 1.79% gain after February’s 2.97% gain, which was

after the broad January rebound of 7.87% (December was down 9.18%). The index closed at

2,834.40, up 1.79% (1.94% with dividends) from last month's 2,784.59 close, when it was up 2.97%

(3.21%). The gain pushed the index closer to a new high, 3.29% away (Sept. 20, 2018, 2,930.75).

Year-to-date (and for Q1 2019), the S&P 500 was up 13.09% (13.65% with dividends). For the one-

year period, the S&P 500 was up 7.33% (9.50% with dividends), and the change from the close of 2017

was 6.01% (8.67% with dividends), as the index was up 32.48% (38.98%) from the Nov. 8, 2016,

election’s 2,139.5y6 close (12.52% and 14.80% annualized, respectively). The Dow® closed at

25,928.68, up 0.05% (0.17% with dividends) from last month’s 25,916.00, when it was up 3.67%

(4.02%). Year-to-date, The Dow was up 11.15% (11.81%), as the one-year return was 7.57%

(10.08%). The bull market marked its 10th anniversary on March 9, 2019 (subject to a new closing

high); it was up 319% over the 10-year period and up 417% with dividends (15.32% annualized and

17.76% annualized with dividends).

The U.S. debt has surpassed the current USD 22 trillion limit (the S&P 500 full market value is USD 24

trillion), and U.S. Treasury Secretary Mnuchin asked Congress to raise the U.S. debt limit as the

Treasury manipulates borrowing and repayment. “Boss! Boss! The plane!” was the call from Fantasy

Budget Island, as Trump released an October 2020 U.S. budget of USD 4.7 trillion that would cut non-

defense discretionary spending by 9% and increase defense spending, including USD 8.6 billion for a

border wall. The 10-year plan has no balanced budget, with a USD 2,029 billion deficit, and assumes

an average 3% growth rate over the 10-year period. Traditionally, the budget is dead on arrival at the


MARKET ATTRIBUTES 3

Congress Hall, regardless of the party in control, as politics (party and local) take over (which is why it

is termed “fantasy”).

A Chinese report said a meeting between Trump and Xi Jinping on trade appeared to be postponed

until June (at least), as U.S. negotiator Lighthizer and Mnuchin went to China to continue the story and

China’s Vice Premier Liu He will go to Washington in early April. The “eventual” Trump-Xi Jinping

meeting remained in the future, as Trump said tariffs would stay in place.

The U.S. Senate voted (59-41) to reject Trump’s emergency declaration to fund the wall, as Trump

issued his first veto of his presidency. The U.S. Justice Department filed a suit declaring the entire

legal premise of Obamacare as unconstitutional (previously it had argued against portions). The

process is expected to be prolonged and to become part of the 2020 presidential campaign. The

confidential weekend issuance of Special Counsel Mueller’s Report on the Investigation into Russian

Interference in the 2016 Presidential Election to U.S. Attorney General Barr, along with Barr’s public

issuance of a four-page summary, changed the public discussion, as Trump & Company declared

victory and Opposition & Company moved toward Congressional investigations. At this point, there has

been no (or little) direct market impact. However, as the presidential election hype and number of

declared candidates grow, the Street’s view of the outcome could seep into trading.

The ECB said it will start its third program to stimulate bank lending to counter a softening economy

and that it would hold rates low at least through 2019. The U.S. Fed’s Beige Book reported a slight

increase in growth, as the negative impact of the government shutdown was seen in autos, restaurants,

and manufacturing, where consumer spending was slow. The Fed met and stayed pat, leaving its

interest rates unchanged, as expected, and signaling that there would be no additional interest rate

increases for 2019, and only one in 2020; it indicated that it would end its balance sheet reduction in

September. The Street had been working under the assumption of continued low interest rates (with no

increases this year), but the Fed’s reassurance helped close the deal. With interest rates already low

from the Fed, PMI reports from the U.S. and Germany both came in well short of expectations, which

added to market concern and helped create an inverted curve (the German 10-year traded negative),

as some investors looked for shelter from the concerns. In an interview, economic commentator

Stephen Moore, who Trump said he would nominate to the Federal Reserve, said the Fed should

immediately reverse course and cut rates by half a percentage point.

As Q4 2018 earnings are put into the history books, the stats show that 501 issues (of the 505 issues;

500 companies) have reported, as 341 (68.1%) have beaten on earnings, 125 (25.0%) have missed,

and 35 (7.0%) have met. Sales reports show that 303 of 495 issues have beaten sales estimates

(61.2%). For 2018, operating earnings posted a 21.8% gain over 2017, with As Reported up 20.5%

and Sales up 9.1%. As Q1 2019 reports start (off fiscal at first, with 70% expected by the end of April),

14 of the 15 issues have beaten earnings estimates, as 6 of the 15 have beaten on sales. The

quarter’s estimate declined over the last three months, down 7.1%, and Q1 2019 was expected to post

a 5.2% gain over Q4 2018 and a slight 0.8% gain ahead of Q1 2018, with expectations 10.9% lower

than the Q3 2018 record high. For 2019, the estimate declined 3.7% from the December 2018 estimate

(and was down 4.2% from the March 2018 estimate), as it projected a 9.1% gain over 2018. Early

2020 estimates show an expected 12.7% gain over 2019 (22.9% over 2018).

Retailer Amazon (AMZN), which owns Whole Foods, said it would start a new grocery store business in

selected cities. Discount store Dollar Tree (DLTR) wrote off USD 2.7 billion of its discount store value,

saying it would close 390 stores and rebrand others. General Electric (GE) said it expects 2019 cash


MARKET ATTRIBUTES 4

flow to be negative, citing weakness in its power unit, as it expected another year of lower profits.

Aircraft issue Boeing (BA) had its new 737 Max 8 plane, operated by Ethiopian Airlines, crash shortly

after takeoff, killing all 158 aboard. It was the second crash of the new Boeing 737 Max 8 (the first was

in Indonesia in October 2018, killing 189), as the plane was grounded globally (378 of which are

currently in service, and 4,659 of which are on order for production, with delivery now on hold).

Indonesia's national airline told Boeing it wished to cancel its USD 4.9 billion order for 49 new 737 Max

8 planes; the two will meet to discuss the matter. Boeing held a group meeting of regulators,

technicians, and pilots, as it moved closer to releasing a software patch for its grounded 737 Max 8

planes. Potentially related, while Xi Jinping was in France (during his Europe tour), China signed a

USD 35 billion airline purchase from Airbus SE

A San Francisco jury trial found German pharmaceutical and chemical issue Bayer’s (BAYRY) recently

purchased weed-killer product company Roundup had triggered a man’s cancer. It was the second

court case against the company on the issue, with the stock down 42% from the end of July 2018

(when the first trial ended). Pharmaceutical issue Biogen (BIIB) said it was ending its two Phase 3 trials

for an Alzheimer’s treatment. Apple (AAPL), as expected, announced its new streaming video platform

(fee based), which will permit the use of competitor entertainment services. Unrelated (but in the same

model), Alphabet’s (GOOGL) YouTube said it would cancel its plans for high-end productions that were

part of its plans for paid-for services. S&P Dow Jones Indices added Fox Corp. (FOXAV; FOXBV) to

the S&P 500, replacing Twenty-First Century Fox (FOXA; FOX). Twenty-First Century Fox, which was

acquired by Walt Disney (DIS), spun off Fox Corp. before the merger, with Fox Corp. being considered

the surviving entity (and staying in the index). S&P DJI announced that Dow (DOW), which is being

spun off from DowDuPont (DWDP), will replace Brighthouse (BHF) in the S&P 500, and that Dow would

replace DowDuPont in the Dow Jones Industrial Average after the close of business on April 1, 2019.

The bull turned 10 years old on March 9, 2019, as it became the longest-running bull market in S&P

500 history (the 1990-2000 one was 113 months long). Based on stock compounding, the index was

up 312%, to a 15.24% annualized rate, and up 408% with dividends, an annualized rate of 17.68%—

meaning that a hypothetical USD 10,000 investment 10 years ago would now be worth USD 40,832.

Consumer Discretionary has done the best, up 712% with dividends (23.32% annualized), with

Information Technology second, up 615% (21.76%). Energy has done the worst (with the only single-

digit annualized return), up 102% (7.31%). As expected, Apple has contributed the most to the

market’s gain, accounting for 3.9% of the index’s gain, followed by Microsoft, accounting for 2.4% of the

gain, then JPMorgan Chase, accounting for 1.9% of the gain. Few would have guessed fourth place—

General Electric, with dividends, adding the bulk of its impact to the index, and accounting for 1.7% of

the gain.

The 10-year U.S. Treasury Bond closed the month at 2.41%, down from last month's 2.72% (2.69% for

year-end 2018, 2.41% for 2017, and 2.45% for 2016). The pound closed down at 1.3081 from 1.3264

(1.2754 for year-end 2018, 1.3498 for 2017, and 1.2345 for 2016), the euro was up to 1.1220 from last

month's 1.1369 (1.1461, 1.2000, 1.0520), the yen closed at 110.82 from last month's 111.38 (109.58,

112.68, 117.00), and the yuan closed at 6.7121 from last month's 6.6937 (6.8785, 6.5030, 6.9448). Oil

increased to close at USD 60.20 from last month's USD 57.25 (USD 45.81 at year-end 2018, USD

60.09 for 2017, and USD 53.89 for 2016). U.S. gasoline pump prices (EIA, all grades) increased,

closing the month at USD 2.701 from last month's USD 2.471 per gallon (USD 2.358, USD 2.589, USD

2.364). Gold was down, closing at USD 1,296.90 from last month's USD 1,314.70 (USD 1,284.70,

USD 1,305.00 for year-end 2017, and USD 1,152.00 for year-end 2016). VIX® closed at 13.71, trading


MARKET ATTRIBUTES 5

as high as 18.33 and as low as 12.37, down from 14.78 last month (25.42 at year-end 2018, 11.05 at

year-end 2017, and 14.04 at year-end 2016). Bitcoin closed at USD 4,096, up from last month's USD

3,825, trading as high as USD 4,123 and as low as USD 3,705 (USD 3.747 at year-end 2018, USD

13,850 at 2017, and USD 968 at 2016).

INDEX REVIEW

S&P 500

The S&P 500 made it three in a row (after a devastating December), as March continued up toward a

new high (if you can’t be optimistic, be a short-seller). March added a respectable 1.79%, after

February’s celebratory 2.97% gain, which came after January’s 7.87% gain that saved it from the bear,

as the Q1 2019 result was a reassuring 13.09% gain; shy (-2.73%) of a full recovery from Q4 2018’s

13.97% devastating decline. The bar talk’s change from “here comes the bear” in December 2018, to

“I’m buying at the bar” in March 2019 can largely be attributed to perception, as December 2018 saw an

intraday low of -20.21%, which came within a tick of an official bear (using closing prices only), and

March 2019 ended 3.29% away from a new closing high. The prior perception was that markets were

headed down due to higher interest rates, slower earnings, slower economic growth, tariffs, and the

potential return of a European recession. The new perception was of low interest rates, high single-

digit growth for earnings (which became acceptable), economic growth in the 3% area (more minus

than plus), and that trade issues would eventually be settled with an acceptable agreement. The

change, however, was mostly based on perception, as uncertainty was replaced by the view that things

will mostly continue on as they are, and at a slow pace. March’s trading picked up, as did its volatility,

though trading became more selective, without the general “buy” mentality. The 10th anniversary of the

bull market (March 9, 2019) came, went, and continued, as did the FOMC’s assurances of no 2019

interest rate increases (with one in 2020), and background talk surfaced (via a potential Trump nominee

for a vacancy on the Fed board) of reversing interest rate increases, with a reduction. Mostly, the

Street focused on the underlying U.S. economy, which was still in better shape than across the pond

(which still hasn’t separated). The U.S.-China trade issue continued on, as an eventual deal is still

expected on the Street—we are, however, seeing some disruption in the economic stats due to actions

around imports and exports. With Q1 2019 almost negating Q4 2018, and the economy chugging

along at an acceptable (but slower than hoped for) rate, the Street is getting ready for earnings season.

At this point, Q1 2019 estimates have declined 7.1% from their year-end 2018 point, and they are

showing less than a 1% year-over-year gain; a miss would put the year-over-year rate in the red. The

Street is looking for assurances from actual Q1 2019 results and full 2019 guidance that the high

single-digit growth is there and will continue, therefore justifying the current multiples. If the Street

doesn’t get it, the perception could change and stocks could come under pressure, similar to the

situation seen in Q4 2018.

The S&P 500 closed at 2,834.40, up 1.79% (1.94% with dividends) from last month's 2,784.59 close,

when it was up 2.97% (3.21%). Year-to-date (and for Q1 2019), the S&P 500 was up 13.07% (13.65%

with dividends), and it was 3.29% away from its Sept. 20, 2018, closing high. For the one-year period,

the index was up 7.33% (9.50% with dividends). Intraday volatility (daily high/low) for the S&P 500

increased to 0.92% in March from February’s 0.69%, as the YTD return was 0.97%; 2018 was 1.21%

and 2017 was 0.51% (which was the low from 1962, with the average at 1.43%). S&P 500 trading

decreased 1% (adjusted for days) over February, after February’s 4% decline; year-over-year March

was up 1%. Moves of at least 1% increased, as 3 of the 21 days moved at least 1% (2 up, 1 down),


MARKET ATTRIBUTES 6

compared to 2 of the 19 days in February (both up), and 6 of 21 in January (4 up and 2 down, including

1 at 3% and 1 at -2%). The monthly high/low price spread increased to 5.07% from last month’s 4.91%

and January’s 10.84% (December was 19.33% and was lower than the one-year average of 7.36% and

10-year average of 6.32%).

Sector variance was unchanged, as 9 of the 11 sectors gained, compared with all 11 up in both

February and January (all 11 were down in December). The spread between the best (Information

Technology, 4.75%) and worst (Financials, -2.75%) sectors for the month was 7.50%, down from last

month’s 5.87% and 7.99% in January; year-to-date (and for Q1 2019), the spread was 13.25% and it

was 25.19% for full year 2018. For the month, Information Technology did the best, adding 4.75% after

last month’s 6.63% (6.88% the month before that), as the YTD return was 19.37%, the best of any

sector. Since the U.S. November 2016 election, the sector was up 62.48% (again, the best of any

sector). Real Estate was right behind, up 4.48% for the month and up 16.64% YTD. Consumer groups

outperformed the index, as Consumer Discretionary was up 3.94% (and up 15.32% YTD), and

Consumer Staples added 3.67% (up 11.16% YTD). Financials did the worst, as prolonged low interest

rates were seen as hurting its margins; the sector fell 2.75% and was up 7.90% YTD (the sector fell

14.67% in 2018). Industrials did poorly (led down by a 13.31% drop from Boeing), declining 1.24% for

the month but up 16.64% YTD.

Breadth declined again, but it remained positive, as 305 issues gained (an average 4.28% each), down

from 382 last month and down from January’s 472 (December only had 14 gainers); 20 issues gained

at least 10% (14.46%), compared with 123 last month (250 the month before that), with no issue up at

least 25% (2 last month). On the down side, 200 issues declined (an average loss of 4.86%), up from

123 last month and 33 the month before that (491 in December), while 22 issues declined at least 10%

(average -15.61%), down from last month’s 33 issues (5 in January). Year-to-date, 460 (465 last

month) issues were up (average 16.53%), as 322 (324) were up at least 10% and 78 (59) were up at

least 25%, while 43 (40) were down, with 12 (9) down at least 10% and none (none) down at least 25%.

The Dow

After nine consecutive weeks of gains (ending in February), the Dow Jones Industrial Average

struggled through the month, as Boeing’s 13.3% decline took 397 points off The Dow, resulting in

0.05% gain for the month; absent Boeing, The Dow 29 would have been up 1.79%. The Dow will get a

makeover (prompted by corporate events); DowDuPont (DWDP) will split into three issues, with

Materials issue Dow (DOW) replacing DowDuPont in The Dow after the close of business on April 1,

2019.

For March, The Dow closed at 25,928.68, up 0.05% for the month (0.17% with dividends) from

February’s 25,916.00 (3.67%, 4.03% with dividends) and January’s 24,999.67 (7.17%, 7.27%). Year-

to-date, the first quarter saw The Dow up 11.15% (11.81%), and the one-year return was 7.33%

(10.08%).

For the month, 21 issues gained, an average of 3.22% each, compared to last month’s 25 and the prior

month’s 27; no issues gained at least 10%, compared to two last month. On the down side, nine issues

fell, with an average decline of 4.23%, compared to two last month (and three in January); two issues

declined at least 10% (average -12.22%; one declined last month). Year-to-date, breadth was positive,

as 25 of the 30 issues were up (average 13.05%), up from 14 last month and 15 in January, while 16

issues were up at least 10% (16.98%; 3 were last month) and no issues were up at least 25%. Five


MARKET ATTRIBUTES 7

issues were down (14 last month), with an average decline of 2.44%, as none were down at least 10%

(three last month).

Issues continued to vary, as trading was more centered. The spread between the best and worst issue

decreased to 23.01% from last month’s 24.4% (22.3% in January). Boeing, which had done the best

last month with a 14.1% gain (up 19.6% in January), fell 13.31% in March, as the second crash of its

new 747 Max aircraft grounded the plane globally. The issue remained up 18.27% YTD and up 168%

from the November 2016 election (the best of any issue). On the other side was Apple, which gained

9.70% for the month and was up 20.42% YTD, but it remained down 13.67% from the Sept. 20, 2018,

closing high. Information Technology continued to do better, as electronic payment and charge card

issue Visa (V) added 5.45% for the month (up 18.38% YTD), software issue Microsoft (MSFT; currently

the largest public issue in the world) gained 5.28% (up 16.12% YTD), and computer network product

issue Cisco (CSCO) added 4.29% (up 24.60% YTD). Financials issues did poorly, as interest rates

declined. JPMorgan Chase (JPM) fell 3.00% (up 3.70% YTD) and Goldman Sachs (GS) fell 2.39% (up

14.93% YTD), while insurance issue Travelers (TRV) posted a gain of 3.20% (up 14.54% YTD). Of

note were drugstore chain Walgreens Boots Alliance (WBA), which fell 11.13% and was down 7.21%

YTD (analysts lowered their target price, citing earnings pressure), and earth-moving equipment issue

Caterpillar (CAT), which fell 1.35% for the month and was up 6.63% YTD.

S&P MidCap 400

The S&P MidCap 400 posted a 0.74% decline for the month, reversing the trend from last month’s

4.08% gain and January’s 10.36% advance (December was down 1.48%). Year-to-date, the index was

up 14.02% (the best of any of the indices reported here), and the one-year return was up 0.93%. Over

the longer term, the two-year gain was 10.27%, with the three-year period up 31.21%. The index

posted gains in 6 of its 11 sectors, down from 9 last month and all 11 being up in January (all 11 were

down in December). Sector spreads decreased, as the difference between the best and worst group

declined to 10.33% from February’s 12.85% (12.68% in January), with the YTD spread decreasing to

12.71%, down from last month’s 21.00%, and the one-year spread increased to 29.55%, up from last

month’s 22.87% (2018 was 36.14%).

Energy did the best (as oil traded over USD 60 again), adding 5.11% for the month and up 19.41%

YTD. The sector remained in the red for the one-year period, at -9.67%, while the two-year return was

-18.93% and the three-year return was -16.36%. Utilities was a distant second, adding 2.13% for the

month and up 9.72% YTD, as Real Estate was close behind, up 2.05% for the month and up 13.67%

YTD. Financials did the worst (as interest rates declined, after the Fed’s assurance of low rates),

declining 5.23% for the month and up 10.37% YTD, but it was down 10.42% for the one-year period.

Consumer stocks split, as Consumer Staples was up 0.69% for the month, up 8.40% YTD, and up

3.03% for the one-year period, while Consumer Discretionary declined 1.83% for the month, was up

10.44% YTD, and was down 7.13% for the one-year period.

Breadth turned negative, as 177 issues gained (average gain of 4.60%), down from last month’s 294,

while 222 issues declined (average loss of 6.11%), up from 105 last month. Twenty issues posted

gains of at least 10% (average 14.58%), down from 72 last month, as 45 fell at least 10% (-14.21%), up

from 23 last month. Significant changes of at least 25% saw only decliners, with two issues (three last

month) down at least 25% (-31.53%). For the three-month period, 345 (233 last month) issues gained

(average 18.32%), as 53 (166) were down (-9.37%), with 257 (78) up at least 10% (22.64%) and 22


MARKET ATTRIBUTES 8

(59) down at least 10% (-17.88%), while 25% gains were reported for 86 (11) issues (34.89%), with 2

(9) reporting a loss of at least 25% (-37.93%).

S&P SmallCap 600

The S&P SmallCap 600 did the worst of the core indices, as it fell 3.53% for the month, after last

month’s 4.24% gain and January’s 10.63% advance. The index was up 11.17% YTD, with the one-

year return a tick in the black, up 0.09% (the worst of the groups).

For the month, 4 of the 11 sectors gained, down from 9 last month and all 11 in January. Sector

variance increased, as the difference between the best and worst sector was 11.70%, up from last

month’s 7.85%, but down from January’s 13.07%. Year-to-date, the variance was 16.98%.

Utilities did the best for the month, up 4.57%, up 8.38% YTD, and up11.92% for the one-year period, as

Energy was a distant second, up 1.29% in March, up 22.54% YTD, but down 22.28% for the one-year

period. Financials did the worst, falling 7.13% in March (the worst of any sector in any of the headline

indices), as its YTD return remained positive, up 5.56%, but its one-year return was negative, at -

4.84%. Health Care fell 4.70%, but it was up 7.21% YTD and up 4.15% for the one-year period.

Consumer groups declined but did better than the index as whole, as Consumer Discretionary was

down 2.58% for the month, up 9.83% YTD, and up 1.69% for the one-year period, and Consumer

Staples was down 3.01%, up 7.62% YTD, and 7.38% for the one-year period.

For the month, breadth declined and went negative, as 197 issues gained (an average gain of 5.79%),

down from 420 gainers last month. On the down side, 401 issues fell (an average loss of 8.95%), up

from last month’s 181. Gains of at least 10% were posted by 36 issues (average 16.00%), compared

with 153 last month, as 135 issues posted declines of at least 10% (average -16.78%), compared with

37 last month. For the three-month period, 478 (321 last month) were up (19.94%), 123 (279) were

down (-13.61%), 322 (150) had at least a 10% gain (27.20%), and 67 (119) had at least a 10% fall

(-21.31%).

S&P Global BMI

It was a difficult month for global markets, but they posted a 0.78% return in March, after February’s

2.59% gain and January’s broad 7.97% gain (which came after December’s broad 7.36% decline). The

U.S. continued to outperform, and absent the U.S.’s 1.28% gain, non-U.S. markets were up 0.21%. For

the three-month period, global markets were up 11.62%, and absent the U.S.’s 13.47% gain, they were

up 9.58%. Over the one-year period, global markets were down 0.23%, but absent the U.S.’s 6.63%

gain, they were off 7.19%. Longer-term yardsticks continued to show the U.S. outperformance pattern,

as the two-year global return was 12.75% with the U.S. (19.14%) and 6.13% without it, and the three-

year return was up 27.61%, but absent the U.S. (37.84%), it was up 17.13%.

For March, the S&P Global BMI increased USD 359 billion (up USD 1,302 billion in February and up

USD 3,768 billion in January). Non-U.S. markets increased USD 175 billion for the month (up USD 433

in February and up USD 1,639 billion in January), as U.S. markets increased USD 184 billion (up USD

870 billion in February and up 2,129 billion in January).

For March, global markets were up 0.78% for the month, and excluding the U.S.’s 1.28% decline, they

were up 0.21%. Year-to-date, global markets were up 11.62%, and excluding the U.S.’s 13.47% return,

they were up 9.58%. For the one-year period, global markets were down 0.23%, and excluding the


MARKET ATTRIBUTES 9

U.S.’s 6.63% gain, they were down 7.19%. Emerging markets were up 1.56% for the month, up

10.06% for the three-month period, and off 8.37% for the one-year period. Developed markets were up

0.69% for the month (-0.17% ex-the U.S), up 11.80% YTD (9.43%), and up 0.75% for the one-year

period (-6.90%).

Sector variance increased, as 8 of the 11 sectors increased (6 were up in February, all 11 were up in

January, and all 11 were down in December). The spread between the best (Real Estate, 3.80%) and

worst (Financials, -2.58%) sectors for the month was 6.38% (the one-year average was 6.83%), a tick

up from last month’s 6.35%; year-to-date, the spread was 11.54% (8.21% last month).

Emerging markets posted a 1.56% gain after last month’s 0.60% gain (and January’s 7.72% gain), as

the YTD return was 10.06% and the one-year period was down 8.37%. The two-year return was up

10.50%, and the three-year return was up 27.33%. For March, 11 of the 23 markets were up,

compared to last month’s 10 (and all 23 in January). India did the best for the month, up 10.39%, and it

was up 6.48% YTD and up 2.13% for the one-year period. Newly added Saudi Arabia was next best,

up 3.76% for the month, with a 13.15% YTD gain and a 10.72% one-year return. Turkey did the worst,

down 15.60% in March, off 3.11% YTD, and down 42.31% for the one-year period. Chile was next, off

4.66% for the month, up 4.19% YTD, and down 17.58% for the one-year period.

Developed markets posted a consolidated 0.69% gain for the month, while the return ex-the U.S. was

-0.17%. For March, 13 of the 25 markets were up, down from February’s 22 (all 25 were up in

January). For the month, developed markets gained 0.69% after last month’s 2.48% gain (and

January’s 8.00% gain); absent the U.S., developed markets were down 0.17% (2.13% last month and

7.33% in January). Year-to-date, developed markets were up 11.80% and up 9.43% without the U.S.

For the one-year period, developed markets were up 0.75% and off 6.90% excluding the U.S. New

Zealand did the best, up 4.60%, up 12.89% YTD, and up 8.44% for the one-year period. Belgium was

next, up 3.21% for March, up 15.32% YTD, and down 16.66% for the one-year period. Luxembourg did

the worst, posting a 12.16% decline, as it was down 4.82% YTD and down 22.28% for one-year period.

Finland was next, down 3.62%, and it was up 5.48% YTD but down 10.73% for the one-year period. Of

note, the UK added 0.42% (11.33% YTD), Canada declined 0.99% (up 11.49% YTD), Germany fell

1.45% (up 6.71% YTD), and Japan fell 0.30% (up 5.69% YTD).


MARKET ATTRIBUTES 10

PERFORMANCE RECAP

Exhibit 2: Monthly Returns

S&P 500 PRICE 1-MONTH (%) YTD (%) 1-YEAR (%) 3-YEAR (%) 5-YEAR (%) FR 12/99 (%)

Energy 489.45 1.98 15.42 -1.77 5.85 -25.03 130.09

Materials 347.27 0.94 9.68 -2.55 23.23 16.40 117.10

Industrials 632.36 -1.24 16.64 1.19 30.75 40.31 131.31

Consumer Discretionary 901.20 3.94 15.32 11.68 43.40 75.55 201.10

Consumer Staples 580.11 3.67 11.16 7.08 6.72 31.27 178.83

Health Care 1062.47 0.35 6.12 12.94 35.55 56.94 225.13

Financials 427.19 -2.75 7.90 -6.63 40.66 41.89 32.78

Information Technology 1299.16 4.75 19.37 13.80 76.25 117.85 60.90

Communication Services 157.68 2.39 13.62 3.98 -8.62 2.13 -51.15

Utilities 295.15 2.65 9.88 15.23 17.16 40.12 107.22

Real Estate 224.36 4.48 16.64 16.82 13.79 40.87 -

S&P 500 2834.40 1.79 13.07 7.33 37.61 51.38 92.91

DOW JONES INDUSTRIAL AVERAGE

PRICE 1-MONTH (%) YTD (%) 1-YEAR (%) 3-YEAR (%) 5-YEAR (%) FR 12/99 (%)

Dow Jones Industrial Average 25928.68 0.05 11.15 7.57 46.61 57.55 125.52

S&P MIDCAP 400 PRICE 1-MONTH (%) YTD (%) 1-YEAR (%) 3-YEAR (%) 5-YEAR (%) FR 12/99 (%)

Energy 353.00 5.11 19.41 -9.67 -16.36 -60.43 101.18

Materials 458.72 -1.05 14.62 -6.03 27.67 22.52 313.38

Industrials 996.10 -0.74 15.55 0.03 41.83 43.93 459.55

Consumer Discretionary 710.53 -1.83 10.44 -7.13 8.58 12.55 257.20

Consumer Staples 1717.50 0.69 8.40 3.30 10.16 31.78 885.84

Health Care 1920.05 0.33 13.20 13.35 60.81 108.14 985.30

Financials 918.91 -5.23 10.37 -10.62 28.54 41.09 177.75

Information Technology 2631.67 -0.12 21.11 9.54 70.69 82.09 212.31

Communication Services 171.29 1.17 15.88 15.18 -37.25 -24.68 -63.80

Utilities 601.47 2.13 9.72 18.94 31.57 49.16 334.22

Real Estate 232.47 2.05 13.67 10.46 - - -

S&P MidCap 400 1896.27 -0.74 14.02 0.93 31.21 37.56 326.44

S&P SMALLCAP 600 PRICE 1-MONTH (%) YTD (%) 1-YEAR (%) 3-YEAR (%) 5-YEAR (%) FR 12/99 (%)

Energy 392.42 1.29 22.54 -22.28 -27.67 -78.80 152.52

Materials 481.67 -5.94 18.54 -6.68 47.75 6.07 249.39

Industrials 1036.08 -3.73 12.32 -1.99 40.22 38.01 418.20

Consumer Discretionary 557.47 -2.58 9.83 1.69 24.11 26.02 311.33

Consumer Staples 1785.58 -3.01 7.62 7.38 23.46 44.06 795.70

Health Care 2774.11 -4.70 7.21 4.15 74.57 118.99 1432.32

Financials 1001.77 -7.13 5.56 -4.84 35.91 40.52 242.01

Information Technology 702.49 -3.11 16.14 3.89 46.07 77.46 156.88

Communication Services 3.17 0.32 13.21 17.41 25.30 28.57 -95.68

Utilities 1006.30 4.57 8.38 11.92 30.83 72.07 436.12

Real Estate 196.23 0.84 14.69 9.11 - - -

S&P SmallCap 600 939.30 -3.53 11.17 0.09 36.73 39.96 374.90

Source: S&P Dow Jones Indices LLC. Data as of March 29, 2019. Past performance is no guarantee of future results. Table is provided for illustrative purposes. Returns shown are price returns.



Exhibit 3: Total Returns

INDEX 1-MONTH (%) YTD (%) 6-MONTH (%) 1-YEAR (%) 3-YEAR (%) 5-YEAR (%) 10-YEAR (%)

S&P 500 1.94 13.65 -1.72 9.50 46.25 67.81 338.09

S&P MidCap 400 -0.57 14.49 -5.29 2.59 37.67 48.90 351.88

S&P SmallCap 600 -3.33 11.61 -10.83 1.57 42.58 50.05 380.58

S&P Composite 1500 1.62 13.64 -2.23 8.79 45.59 65.79 341.44

Dow Jones Industrial Average 0.17 11.81 -0.84 10.08 57.60 77.88 339.91

Source: S&P Dow Jones Indices LLC. Data as of March 29, 2019. Past performance is no guarantee of future results. Table is provided for

illustrative purposes.

Exhibit 4: S&P Global BMI, Emerging, Sorted by March Performance

BMI MEMBER 1-MONTH (%) YTD (%) 6-MONTH (%) 1-YEAR (%) 2-YEAR (%) 3-YEAR (%)

Global 0.78 11.62 -3.50 -0.23 12.75 27.51

Global Ex-U.S. 0.21 9.58 -3.71 -7.19 6.13 17.13

Emerging 1.56 10.06 3.22 -8.37 10.50 27.33

India 10.39 6.48 10.54 2.13 14.21 42.22

Saudi Arabia 3.76 13.15 10.72 7.32 29.91 50.01

Taiw an 2.29 9.89 -4.11 -8.04 6.19 25.78

China 2.24 16.72 3.97 -9.12 21.06 40.55

Colombia 2.08 23.42 -0.09 -2.72 6.38 12.92

Peru 1.01 10.44 8.01 -0.08 35.55 75.15

Philippines 0.96 7.04 12.64 -1.10 2.88 -2.28

Hungary 0.85 5.84 11.86 -1.54 30.60 46.61

Russia 0.59 12.18 -0.17 -6.93 8.27 37.50

Greece 0.45 13.69 -4.62 -18.48 -1.99 5.54

Mexico 0.31 6.28 -14.52 -11.83 -12.86 -17.65

Egypt -0.01 18.60 7.94 -9.26 21.40 5.44

Indonesia -0.53 4.93 12.97 -0.98 5.11 16.15

U.A.E. -1.28 3.73 -2.17 -2.37 -5.40 -2.88

Thailand -1.55 8.78 -4.24 -8.06 12.81 29.61

Qatar -1.71 -4.83 1.74 17.22 -1.38 -0.03

Poland -1.91 0.61 -2.88 -9.17 6.31 14.62

Czech Republic -2.54 3.66 -4.95 -10.44 22.57 16.10

Malaysia -2.65 1.77 -6.32 -15.18 2.18 -6.91

South Africa -2.68 3.40 -1.03 -20.99 -3.51 3.53

Brazil -3.80 7.74 22.32 -6.69 14.20 61.97

Pakistan -4.59 3.11 -20.35 -35.01 -26.44 -18.95

Chile -4.66 4.19 -4.49 -17.58 2.01 22.29

Turkey -15.60 -3.11 -0.04 -42.31 -33.69 -45.20


illustrative purposes. Returns shown are price returns.



Exhibit 5: S&P Global BMI, Developed, Sorted by March Performance

BMI MEMBER 1-MONTH (%) YTD (%) 6-MONTH (%) 1-YEAR (%) 2-YEAR (%) 3-YEAR (%)

Developed 0.69 11.80 -4.20 0.75 13.01 27.55

Developed Ex-U.S. -0.17 9.43 -5.50 -6.90 4.97 14.62

New Zealand 4.60 12.89 6.44 8.44 25.80 29.62

Belgium 3.21 15.32 -5.04 -16.66 -7.56 -7.26

Denmark 1.92 11.87 -0.92 -4.67 18.44 9.48

Sw itzerland 1.52 12.05 1.30 3.59 10.95 18.83

United States 1.28 13.47 -3.29 6.63 19.14 37.84

Italy 1.16 13.44 -1.98 -14.27 6.92 13.87

Netherlands 0.86 13.89 0.86 -4.41 14.47 27.25

Singapore 0.58 7.02 -1.23 -10.96 5.38 12.27

Hong Kong 0.51 14.14 7.88 2.74 16.30 28.14

France 0.48 10.82 -6.40 -6.49 10.72 20.96

Portugal 0.42 8.73 -5.90 -9.93 7.49 4.91

United Kingdom 0.42 11.33 -3.20 -4.25 4.35 6.48

Australia 0.01 10.57 -2.17 -0.15 -0.83 14.17

Sw eden -0.14 7.90 -7.63 -5.20 0.57 6.64

Japan -0.30 5.69 -9.67 -9.71 6.33 20.19

Israel -0.89 11.37 -2.28 10.96 7.68 4.77

Canada -0.99 14.92 -3.67 0.58 3.00 16.26

Spain -1.08 6.72 -4.48 -11.81 -5.86 6.09

Norw ay -1.10 8.46 -13.64 -4.92 15.19 29.02

Ireland -1.20 10.35 -7.94 -11.05 1.04 0.95

Germany -1.45 6.71 -10.25 -16.19 -4.16 6.89

Austria -1.78 9.55 -14.30 -22.08 12.65 32.62

Korea -3.09 4.32 -10.79 -18.28 1.39 14.73

Finland -3.62 5.48 -11.24 -10.73 6.27 13.05

Luxembourg -12.16 -4.82 -27.00 -22.28 -20.13 -3.82


illustrative purposes. Returns shown are price returns.



Exhibit 6: Price-to-Earnings Ratios

INDEX 2016 2017 ESTIMATED 2018 ESTIMATED 2019

S&P 500 21.07 21.47 18.70 17.14

S&P 500 Consumer Discretionary 19.45 22.29 22.62 21.45

S&P 500 Consumer Staples 20.99 21.50 19.77 19.19

S&P 500 Energy -158.88 40.17 15.98 18.96

S&P 500 Financials 16.25 17.45 13.67 11.47

S&P 500 Health Care 18.77 21.21 21.23 16.01

S&P 500 Industrials 19.88 21.06 16.89 16.02

S&P 500 Information Technology 21.27 21.87 20.39 19.26

S&P 500 Materials 23.99 22.06 16.09 16.20

S&P 500 Communication Services 17.91 16.31 13.39 17.78

S&P 500 Utilities 18.06 18.40 19.15 18.66

S&P 500 Real Estate 25.78 36.40 35.06 43.40


S&P MidCap 400 25.73 24.33 19.76 16.83



S&P 400 Energy -9.56 -263.86 -267.42 38.12

S&P 400 Financials 20.15 19.51 14.67 12.14

S&P 400 Health Care 26.19 30.96 32.34 19.46

S&P 400 Industrials 20.87 22.44 17.93 15.40


S&P 400 Materials 23.95 18.64 12.57 13.04

S&P 400 Communication Services 82.36 -12.96 23.66 20.81

S&P 400 Utilities 20.07 20.16 23.51 20.93

S&P 400 Real Estate 28.30 31.33 24.81 32.60


S&P SmallCap 600 32.73 30.02 24.10 17.97



S&P 600 Energy -6.44 -27.40 53.32 32.24

S&P 600 Financials 21.61 19.29 16.46 12.50

S&P 600 Health Care 126.38 -513.58 180.61 34.48

S&P 600 Industrials 24.57 23.94 19.29 16.33


S&P 600 Materials 25.45 22.76 18.48 14.70

S&P 600 Communication Services 41.43 284.00 -317.00 105.67

S&P 600 Utilities 23.24 26.50 25.85 28.14

S&P 600 Real Estate 29.05 33.24 45.4 -

Source: S&P Dow Jones Indices LLC. Data as of March 29, 2019. Past performance is no guarantee of future results. Table is provided for illustrative purposes.



Exhibit 7: Operating EPS Changes

INDEX

Q1 2018

OVER Q1 2017 (%)

Q2 2018

OVER Q2 2017 (%)

Q3 2018

OVER Q3 2017 (%)

Q4 2018E

OVER Q4 2017 (%)

Q1 2019E

OVER Q1 2018 (%)

2018E

OVER 2017 (%)

2019E

OVER 2018E (%)

S&P 500 26.79 26.68 32.08 3.49 0.85 21.76 9.06

S&P 500 Consumer Discretionary 14.41 20.21 18.40 0.52 -11.18 13.05 5.45

S&P 500 Consumer Staples 13.02 13.54 9.07 -4.04 -2.51 7.47 3.00

S&P 500 Energy 62.37 142.18 126.27 214.68 -22.06 130.40 -15.68

S&P 500 Financials 15.37 30.52 61.56 -34.64 12.69 17.53 19.23

S&P 500 Health Care 15.49 6.03 15.57 7.36 30.29 10.98 32.65

S&P 500 Industrials 40.19 20.95 22.11 14.39 -8.51 23.61 5.45

S&P 500 Information Technology 48.54 34.97 36.80 -0.87 -3.53 25.93 5.89

S&P 500 Materials 18.83 35.58 25.85 20.45 -17.85 25.61 -0.65

S&P 500 Communication Services 32.96 39.29 -22.63 11.86 -44.01 15.72 -24.70

S&P 500 Utilities 18.67 14.05 10.09 -23.53 -6.74 6.06 2.66

S&P 500 Real Estate 8.76 12.40 7.69 28.99 -23.49 14.29 -19.22

INDEX Q1 2018

OVER Q1 2017 (%)

Q2 2018 OVER

Q2 2017 (%)

Q3 2018 OVER

Q3 2017 (%)

Q4 2018E OVER

Q4 2017 (%)

Q1 2019E OVER

Q1 2018 (%)

2018E OVER

2017 (%)

2019E OVER

2018E (%)

S&P MidCap 400 25.21 26.63 50.41 -4.89 7.67 22.86 17.38

S&P 400 Consumer Discretionary 26.41 15.93 17.92 24.14 -18.47 20.91 -6.06

S&P 400 Consumer Staples 40.17 14.83 3.79 -4.69 -20.38 12.65 5.49

S&P 400 Energy 900.00 -376.50 102.93 -81.69 -55.52 17.50 801.52

S&P 400 Financials 9.69 36.41 92.68 -31.35 14.55 20.93 20.82

S&P 400 Health Care 15.97 141.59 27.64 -88.81 87.80 15.01 66.18

S&P 400 Industrials 29.63 17.77 19.22 22.51 9.20 21.63 16.45

S&P 400 Information Technology 22.10 16.56 39.28 46.84 49.92 32.07 41.43

S&P 400 Materials 32.01 51.35 41.59 5.08 1.64 32.87 -3.59

S&P 400 Communication Services 183.04 141.84 162.97 185.34 -23.66 163.62 13.67

S&P 400 Utilities 10.62 14.54 -8.96 -17.91 13.23 -2.25 12.35

S&P 400 Real Estate 33.72 52.87 102.82 -36.25 -43.91 28.71 -23.91

INDEX Q1 2018

OVER Q1 2017 (%)

Q2 2018 OVER

Q2 2017 (%)

Q3 2018 OVER

Q3 2017 (%)

Q4 2018E OVER

Q4 2017 (%)

Q1 2019E OVER

Q1 2018 (%)

2018E OVER

2017 (%)

2019E OVER

2018E (%)

S&P SmallCap 600 27.12 30.78 28.15 14.79 7.77 24.94 34.13

S&P 600 Consumer Discretionary 40.37 58.92 61.98 12.16 -14.05 38.48 13.76

S&P 600 Consumer Staples 111.37 -21.97 -46.85 -56.15 -50.96 -8.99 30.29

S&P 600 Energy 101.76 -508.75 143.52 365.57 363.64 135.90 65.35

S&P 600 Financials 25.29 44.20 32.16 -37.73 12.06 13.16 31.73

S&P 600 Health Care 677.54 8284.62 -95.82 71.15 81.30 435.37 423.83

S&P 600 Industrials 8.91 35.49 24.96 15.15 11.89 21.38 18.12

S&P 600 Information Technology 6.00 -0.92 -13.36 1.61 34.57 -1.95 65.67

S&P 600 Materials 11.17 32.68 26.11 -24.95 -12.18 12.23 25.66

S&P 600 Communication Services 0.00 -300.00 -200.00 400.00 0.00 - 400.00

S&P 600 Utilities 27.61 22.27 -42.03 -4.38 -23.79 7.51 -8.14

S&P 600 Real Estate -62.29 -6.63 59.26 -102.94 - -29.41 -


illustrative purposes.



Exhibit 8: Breadth of Change (Issues With Monthly Price Changes as Described by Type)

S&P 500

TYPE MARCH 2019 AVERAGE % CHANGE YTD AVERAGE % CHANGE

Up 305 4.28 460 16.53

Dow n 200 -4.86 43 -7.79

Up >= 10% 20 12.77 322 20.89

Dow n <= -10% 22 -13.62 12 -17.29

Up >= 25% 0 0.00 78 33.64

Dow n <= -25% 1 -27.94 0 0.00

Up >= 50% 0 0.00 3 67.21

Dow n <= -50% 0 0.00 0 0.00

S&P MIDCAP 400


Up 177 4.60 345 18.32

Dow n 222 -6.11 53 -9.37

Up >= 10% 20 14.58 257 22.64

Dow n <= -10% 45 -14.21 22 -17.88

Up >= 25% 0 0.00 86 34.89

Dow n <= -25% 2 -31.53 2 -37.93

Up >= 50% 0 0.00 7 61.43

Dow n <= -50% 0 0.00 0 0.00

S&P SMALLCAP 600


Up 197 5.79 478 19.94

Dow n 401 -8.95 123 -13.61

Up >= 10% 36 16.00 322 27.20

Dow n <= -10% 135 -16.78 67 -21.31

Up >= 25% 1 38.74 134 42.24

Dow n <= -25% 16 -33.39 17 -37.75

Up >= 50% 0 0.00 25 75.73

Dow n <= -50% 1 -51.35 3 -57.48

DOW JONES INDUSTRIAL AVERAGE


Up 21 3.22 25 13.05

Dow n 9 -4.23 5 -2.44

Up >= 10% 0 0.00 16 16.98

Dow n <= -10% 2 -12.22 0 0.00

Up >= 25% 0 0.00 0 0.00

Dow n <= -25% 0 0.00 0 0.00

Up >= 50% 0 0.00 0 0.00

Dow n <= -50% 0 0.00 0 0.00

Source: S&P Dow Jones Indices LLC. Data as of March 29, 2019. Past performance is no guarantee of future results. Table is provided for illustrative purposes.



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