The stock market bounced back rapidly after the steep losses last quarter, showing the importance of staying invested after downturns. In fact, it was the best quarter in nearly a decade for U.S. stocks with the S&P 500 up 13.65% and smaller U.S. stocks up 14.58%. Technology and real estate were the best performing sectors, while health care was the worst. International stocks posted strong gains too, with both developed international and emerging markets up around 10%. Volatility returned to lower levels. The rebound was fueled by optimism for a trade deal with China and by the Federal Reserve softening its position on future interest rate hikes.
In response to signs of a global growth slowdown, the Federal Reserve shifted course and indicated that further interest rate increases will probably not occur this year. The yield on the 10-year Treasury fell from 2.69% to 2.41% by quarter-end, causing an inverted yield curve, which occurs when short-term bond yields are higher than longer-term bond yields. This yield drop helped bonds post positive returns of 2.94% for the quarter.
Index Performance
| Index | 1st Quarter 2019 | Year-to-date |
| Dow Jones 30 | 11.81% | 11.81% |
| S&P 500 | 13.65% | 13.65% |
| Russell 2000 | 14.58% | 14.58% |
| Bloomberg Barclays U.S. Agg Bond | 2.94% | 2.94% |
| MSCI EAFE Index | 10.13% | 10.13% |
| MSCI EM Index | 9.95% | 9.95% |
Sources: Y Charts and J.P. Morgan Asset Management
Figures as of March 31, 2019. Past performance cannot guarantee future results.