Two Quarters at Two Historical Extremes
The last six months have seen particularly strong market action, especially given that the global economy was not dipping into or coming out of a recession. Looking at the quarterly returns of equity indices, here the S&P 500 index reveals how unique the last two quarters have been. Outside of recessions and their recovery, Q4 2018 was the third worst quarter, while Q1 2019 was the sixth best quarter going back to 1990. The end of 2018 had the hallmarks of being oversold at the time, and the 2019 recovery is so far, in our opinion, showing signs of being overbought. The corporate earnings season, which is set to kick off over the next couple of weeks, could bring markets back down to the reality of decelerating growth and geopolitical risk.
Quarterly Returns for the S&P 500 Index (1990-2019)
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