Market Review

Quarterly Market Review

Data as of March 31, 2019


Receive timely market data and analysis to share with your clients.

U.S. Stocks

After suffering their worst quarterly decline in a decade to close out 2018, stocks bounced back in the first quarter of 2019 and erased most of their losses. The large‑cap benchmarks ended within roughly 4% of the all‑time highs they established in September 2018, while the S&P MidCap 400 Index and small‑cap Russell 2000 Index remained 8% and 12% from their peaks, respectively. Reflecting improved sentiment and the return to a “risk on” environment, volatility—as measured by the Cboe Volatility Index (VIX)—moderated throughout the quarter.

The technology‑heavy Nasdaq Composite Index performed best for the period. Within the S&P 500 Index, tech shares also performed well, gaining nearly 20% on a total return basis (including dividends), followed by real estate and industrials shares, which gained 18% and 17%, respectively. Energy shares were also particularly strong, helped by a rebound in oil prices. Health care shares performed worst, weighed down by some prominent failures in new drug tests and concerns over CVS Health’s attempts to integrate its recent takeover of Aetna. Financial shares also lagged as a plunge in long‑term interest rates threatened bank lending margins.

Doubly Dovish Turn In Monetary Policy Restores Confidence

The monetary policy environment for equities brightened considerably in the quarter, providing a powerful tailwind to sentiment. The S&P 500 scored its best daily gain for the quarter on January 4, after Federal Reserve Chairman Jerome Powell stressed to a group of economists that the Fed would not hesitate to respond with all the tools at its disposal to counteract an economic downturn or financial turmoil. Minutes from the Fed’s December meeting also encouraged investors, with policymakers citing their awareness of “concerns about downside risks evident in financial markets and in reports from business contacts.”

The Fed’s signals following its January 29–30 policy meeting provided further encouragement, helping send the S&P 500 Index to its second‑biggest daily gain for the quarter. The central bank decided to keep rates steady, as was widely expected, but investors were cheered by an unexpectedly “doubly dovish” post‑meeting statement, which removed all references to further rate increases and called into question whether the Fed would continue to wind down its balance sheet. Stocks jumped again after the Fed’s next meeting on March 19–20. The summary of individual policymakers’ economic and policy projections released after the meeting showed that 11 out of the 17 Fed officials who set policy now expect no rate hikes in 2019, while four expect just one. Indeed, markets began pricing in a significant possibility that the Fed’s next move would be to cut rates.

Total Returns
  1Q 2019 Year-to-Date
Dow Jones Industrial Average 11.81% 11.81%
S&P 500 Index 13.65 13.65
Nasdaq Composite Index 16.49 16.49
S&P MidCap 400 Index 14.49 14.49
Russell 2000 Index 14.58 14.58

Past performance is not a reliable indicator of future performance. 
Note: Returns are for the periods ended March 31, 2019. The returns include dividends based on data compiled by T. Rowe Price, except for the Nasdaq Composite, whose return is principal only.
Sources: Standard & Poor’s, LSE Group. See Additional Disclosures.

Global Growth Slows

The downside of the about‑face in Fed policy was the reason driving the change—continuing signs of a moderation in U.S. growth and a much sharper slowdown overseas. Chinese and European growth expectations ratcheted lower throughout the quarter, and Wall Street had one of its worst days on March 22, following news of a sharp contraction in the export‑sensitive German manufacturing sector. U.S. manufacturing continued to expand, but at a significantly slower pace. The U.S. housing sector also weakened, particularly in terms of new construction. Consumer spending and business investment generally disappointed as well, held down in part by the partial federal government shutdown, which lasted through most of January. Labor market signals remained strong through most of the quarter, but February job gains, reported on March 1, were at the lowest level in 17 months.

Corporate profit growth also appeared to be moderating, although not as much as expected. Investors appeared to respond positively overall to fourth‑quarter 2018 earnings reports as they were released in January and February. According to FactSet, overall quarterly profits for the S&P 500 rose 13.3% in the quarter versus a year earlier, somewhat above estimates.

Prospects Improve For Trade Deal

Hopes for a trade deal between the U.S. and China improved as the quarter progressed, providing an additional boost to markets. Early in the quarter, stocks rose after President Trump tweeted that trade talks were “going very well” and again on February 12, after he told reporters that he would be willing to extend a deadline to increase tariffs if the two nations were nearing a deal, which he did two weeks later. On March 22, President Trump told an interviewer that the two sides were “getting very close” to a deal as U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin prepared to travel to Beijing for the next round of face‑to‑face talks. Mnuchin’s tweet that the talks had been constructive seemed to be one factor in the market’s strong rally on March 29, the last trading day of the quarter.

Slowing Growth And Earnings Highlight Importance Of Stock Selection

The Fed’s dovish turn and growing hopes for a trade deal have moderated two of the primary sources of uncertainty that derailed markets late in 2018. The growth worries that emerged in late 2018 remain a more persistent source of concern, but it seems likely that a recession will be averted in the coming year. Earnings growth will be harder to come by, however, as the impact of the December 2017 tax cuts on year‑over‑year comparisons rolls off and fiscal stimulus wanes. This could favor an active approach to investing, along with careful fundamental research to find companies able to leverage competitive advantages to prosper in a more challenging environment.

Additional Disclosures

London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). © LSE Group 2019. FTSE Russell is a trading name of certain of the LSE Group companies. “Russell®” is a trade mark of the relevant LSE Group companies and is used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company’s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.

S&P Indices are products of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates (“SPDJI”), and have been licensed for use by T. Rowe Price. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by T. Rowe Price. T. Rowe Price is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P Indices.


Subscribe to regular email updates and inform your client conversations.

Important Information

This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action.

The views contained herein are those of the authors as of April 2019 and are subject to change without notice; these views may differ from those of other T. Rowe Price associates.

This information is not intended to reflect a current or past recommendation, investment advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Investors will need to consider their own circumstances before making an investment decision.

Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy.

Past performance is not a reliable indicator of future performance. All investments are subject to market risk, including the possible loss of principal. All charts and tables are shown for illustrative purposes only.

T. Rowe Price Investment Services, Inc., distributor, and T. Rowe Price Associates, Inc., investment advisor.

© 2019 T. Rowe Price. All rights reserved. T. Rowe Price, INVEST WITH CONFIDENCE, and the bighorn sheep design are, collectively and/or apart, trademarks of T. Rowe Price Group, Inc.

Tap to dismiss

Manage Subscriptions

Unsubscribe All

Manage your watched Funds and Insights subscriptions here.


Change Details

Congratulations! You are now registered.

Begin watching and receiving email updates for:


Sign in to manage your subscriptions and watch list.



Latest Date Range
Download Cancel

This content is restricted for Institutional Investors use only. We were not able to validate your status as an Institutional Investor with the information you provided at registration.

Please contact the T. Rowe Price Team with questions or to revise your status.


You will need to accept the Terms & Conditions again.


You have updated your email address.

An activation email has been sent to your new email address from T. Rowe Price.

Please click on the activation link in order to receive email updates.


You have an existing account

Click OK to view your subscriptions and watch list.


Confirm Cancel