The Fed raised the interest rate by the expected 0.25% during its March FOMC meeting after a volatile Q1 left many unsure of whether or not rates would rise. February initial jobless claims reports surprised with 223,000 claims versus an expected 245,000. Unemployment dropped to 4.7% for the Trump’s first full month in office, but investors remain divided over how much of Feb/March’s success can be attributed to economic policy over stronger consumer sentiment. Strong earnings growth and employment have spurred growth, but SMIF believes consumer overconfidence is also a factor as the numbers don’t support high PCE and consumer sentiment for the month. As factors like ISM index and PMI manufacturing continue to reach present highs, it remains uncertain how much of this new optimism is justified. Emerging markets continue to outpace developed ones as political instability (particularly in the EU) threatens equity markets and investors herd towards safe haven assets.
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The month of March represented somewhat of a slowdown for domestic equities markets, with the Dow Jones Industrial Average losing 0.60%, the S&P 500 gaining 0.12%, and the Nasdaq gaining 1.57%. Major market news for the month included the IPO of Snap, Inc. The highly anticipated tech IPO opened at a relatively high valuation at $24 per share. After roaring up to $27 per share, the stock slowly sunk down to the low $20s where it currently trades today. In addition, the Federal Reserve moved to raise short-term interest rates 25 basis points. This move brought the short-term interest rate up to 0.75%, however, the move was largely priced into the market. Overall for the quarter, the Trump Trade largely carried equity markets to outstanding gains. The Dow climbed 5.19%, Nasdaq 10.13%, and S&P 500 gaining 6.07%.
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