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Market Digest – US Stocks End Q1 With Modest Gains

Market Digest – Week Ending 4/2

US Stocks finished a short, choppy week with modest gains. International stocks outperformed. Economic news was slow. After years of back and forth, The US and Iran reached a nuclear agreement. A private jobs report indicated employment growth may be slowing the Labor Department will release its own report on Friday.

Weekly Returns:
S&P 500: 2,069 (+0.3%)
FTSE All-World ex-US: (+1.0%)
US 10 Year Treasury Yield: 1.91% (-0.04%)
Gold: $1,202 (+0.4%)
USD/EUR: $1.088 (-0.1%)

Major Events:
• Monday – UnitedHealth announced it will buy Catamaran for $12.8 billion.
• Wednesday – GoDaddy shares surged 30+% in a successful IPO which valued the company at nearly $4 billion.
• Wednesday – California ordered mandatory water cuts for the first time. They are likely to include household water rationing in some districts.
• Wednesday – President Obama moved to add sanctions against nations and people who participate in cyberattacks against US citizens and companies.
• Thursday – Iran and the US agreed to a framework for a nuclear deal. It would place restrictions on Iran’s nuclear work for 25 years in exchange for lifting sanctions.
• Friday – Stock market closed for Good Friday.

Our take:

The first quarter ended Tuesday. Quietly, International Stocks meaningfully outperformed US Stocks. The FTSE All-World Index rose 4.3%, while the S&P 500 was up less than 1%. This marks a stark contrast to last year when the S&P was up double digits and International Stocks were down for the year.

It wasn’t just last year. The US has been generally outperforming since 2010, and the spread has grown large. One quarter is not enough to declare a new trend, but does provide a nice reminder that capital markets tend to mean-revert. It has been easy to sour on International Stocks lately, but the start of 2015 should be inspiration to remain diversified. If you’ve haven’t done so for a while, odds are you’re now overweight US relative to International – don’t forget to rebalance periodically.

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