In the last newsletter I stated that \u201cchange may be afoot.\u201d The first quarter was certainly driven by change. The Standard and Poor\u2019s 500 Index, an index of the 500 largest United States public stocks, fell 0.8% for the quarter\uf0bethe first negative quarter since second quarter 2015. In 2015, first quarter GDP dropped 0.1% due to falling oil prices inciting fears of an economic slowdown. Consequently, the economy remained strong and the S&P 500 Index posted nine consecutive quarters of gains up until now.<\/p>\n
The stock market started 2018 the way it ended the previous year\uf0beroaring higher. At the end of January, uncertainty was creeping into the market due to four primary factors:<\/p>\n
1. New Federal Reserve Chair.<\/strong> Jerome Powell was sworn in on February 5, 2018, replacing Janet Yellen as Chairman of the Federal Reserve. With change came uncertainty regarding the pace of interest rate hikes this year, which could slow economic growth.<\/p>\n 2. Technology Regulation.<\/strong> Concerns of future technology regulation were raised following the news that Facebook may have misused user data.<\/p>\n 3. Tariffs.<\/strong> President Trump signed orders to impose tariffs on steel and aluminum from select countries, prompting fears of a trade war. China shot back with tariffs on 128 U.S. imports from meat and fruit to steel pipes.<\/p>\n 4. Valuation.<\/strong> S&P 500 prices have topped 20 times earnings since fourth quarter 2014. A price-to-earnings ratio above 20 is well above historic averages. As the bull market continues to advance, concerns about a price correction have risen.<\/p>\n Major indices swiftly lost more than 10% of their value over nine trading sessions in February. A loss of 10% puts indices in correction territory. Many investors believed that a normal correction, marked by a 10% drop in prices, would be healthy for the market and may be overdue.<\/p>\n While it feels somewhat relieving to get this correction out of the way, it is hard to say if this has been enough to shake out concerns of overvaluation in stock prices. Following the sharp run-up at the beginning of the year, the 10% correction only brought prices down to November 2017 levels. We hope to maintain sideways volatility for a few more months to shake out market concerns. However, another sharp drop in prices may be likely before we can move forward again.<\/p>\n","protected":false},"excerpt":{"rendered":" In the last newsletter I stated that \u201cchange may be afoot.\u201d The first quarter was certainly driven by change. The Standard and Poor\u2019s 500 Index, an index of the 500 largest United States public stocks, fell 0.8% for the quarter\uf0bethe first negative quarter since second quarter 2015. In 2015, first quarter GDP dropped 0.1% due […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[119,123],"tags":[],"class_list":["post-6194","post","type-post","status-publish","format-standard","hentry","category-market-commentary","category-market-performance"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p7kXxe-1BU","jetpack-related-posts":[{"id":6932,"url":"https:\/\/schenkelberg.investments\/?p=6932","url_meta":{"origin":6194,"position":0},"title":"U.S. vs International\/U.S Sectors","author":"J.J. Schenkelberg, CFA","date":"April 6, 2026","format":false,"excerpt":"Performance Source: Koyfin.com Price Return U.S. Versus International The S&P 500 Index, an index of large U.S. companies, posted a price return of -4.6% for the first quarter of 2026. Large U.S. stocks underperformed international for the quarter as measured by the iShares MSCI ACWI ex-US Index, a representation of\u2026","rel":"","context":"In "Market Commentary"","block_context":{"text":"Market Commentary","link":"https:\/\/schenkelberg.investments\/?cat=119"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/schenkelberg.investments\/wp-content\/uploads\/2026\/04\/image-2.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/schenkelberg.investments\/wp-content\/uploads\/2026\/04\/image-2.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/schenkelberg.investments\/wp-content\/uploads\/2026\/04\/image-2.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":6506,"url":"https:\/\/schenkelberg.investments\/?p=6506","url_meta":{"origin":6194,"position":1},"title":"Market Update – First Quarter 2020","author":"J.J. Schenkelberg, CFA","date":"April 3, 2020","format":false,"excerpt":"U.S. Versus International The S&P 500, an index of large U.S. companies, posted a total return of -19.9% for the First Quarter of 2020. U.S. stocks marginally outperformed international for the quarter as measured by the iShares MSCI EAFE ETF, a representation of international stocks outside the U.S. EAFE. Total\u2026","rel":"","context":"In "Market Commentary"","block_context":{"text":"Market Commentary","link":"https:\/\/schenkelberg.investments\/?cat=119"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":6257,"url":"https:\/\/schenkelberg.investments\/?p=6257","url_meta":{"origin":6194,"position":2},"title":"Market Update – Bull Market Stays Alive","author":"J.J. Schenkelberg, CFA","date":"January 4, 2019","format":false,"excerpt":"The longest bull market in history may have ended on September 20, 2018. However, we cannot officially say that yet. The end of a bull market is characterized by a 20% drop from the peak. The S&P 500 was two points away from 2,344.6 on December 27th before staging its\u2026","rel":"","context":"In "Market Commentary"","block_context":{"text":"Market Commentary","link":"https:\/\/schenkelberg.investments\/?cat=119"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":6028,"url":"https:\/\/schenkelberg.investments\/?p=6028","url_meta":{"origin":6194,"position":3},"title":"3rd Quarter 2016 Market Update \u2013 Calm Before the Storm?","author":"J.J. Schenkelberg, CFA","date":"November 30, 2016","format":false,"excerpt":" Third quarter performance of the general equity market was marked by calm markets followed by Federal Reserve driven\u2010volatility. Prior to the Federal Reserve beige book report in September, equity markets were quite calm, as measured by the CBOE VIX index (Chicago Board Options Exchange Volatility\u2026","rel":"","context":"In "Market Commentary"","block_context":{"text":"Market Commentary","link":"https:\/\/schenkelberg.investments\/?cat=119"},"img":{"alt_text":"screen-shot-2016-11-30-at-12-21-46-pm","src":"https:\/\/i0.wp.com\/schenkelberg.investments\/wp-content\/uploads\/2016\/11\/Screen-Shot-2016-11-30-at-12.21.46-PM-300x136.png?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":6159,"url":"https:\/\/schenkelberg.investments\/?p=6159","url_meta":{"origin":6194,"position":4},"title":"4Q 2016 General Market Performance Breakdown","author":"J.J. Schenkelberg, CFA","date":"January 8, 2017","format":false,"excerpt":"U.S. Versus International The S&P 500, an index of large U.S. companies, posted a total return of 3.8% for the 13-weeks and 12.0% for the full year ending December 31, 2016. U.S. stocks outpaced International for the quarter as measured by the All Country World Index ex-U.S. stocks, a representation\u2026","rel":"","context":"In "Market Commentary"","block_context":{"text":"Market Commentary","link":"https:\/\/schenkelberg.investments\/?cat=119"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":6637,"url":"https:\/\/schenkelberg.investments\/?p=6637","url_meta":{"origin":6194,"position":5},"title":"Market Update. Second Quarter 2022","author":"J.J. Schenkelberg, CFA","date":"July 7, 2022","format":false,"excerpt":"U.S. Versus International The S&P 500, an index of large U.S. companies, posted a total return of -16.5% for the Second Quarter of 2022. U.S. stocks marginally outperformed international again for the quarter as measured by the iShares MSCI EAFE ETF, a representation of international stocks outside the U.S. EAFE\u2026","rel":"","context":"Similar post","block_context":{"text":"Similar post","link":""},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/schenkelberg.investments\/index.php?rest_route=\/wp\/v2\/posts\/6194","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/schenkelberg.investments\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/schenkelberg.investments\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/schenkelberg.investments\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/schenkelberg.investments\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6194"}],"version-history":[{"count":1,"href":"https:\/\/schenkelberg.investments\/index.php?rest_route=\/wp\/v2\/posts\/6194\/revisions"}],"predecessor-version":[{"id":6195,"href":"https:\/\/schenkelberg.investments\/index.php?rest_route=\/wp\/v2\/posts\/6194\/revisions\/6195"}],"wp:attachment":[{"href":"https:\/\/schenkelberg.investments\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6194"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/schenkelberg.investments\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6194"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/schenkelberg.investments\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6194"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}