- The S&P 500® was up 3.58% in March, bringing its YTD return to -4.95%.
- The Dow Jones Industrial Average® gained 2.32% for the month and was down 4.57% YTD.
- The S&P MidCap 400® gained 1.21% for the month, bringing its YTD return to -5.22%.
- The S&P SmallCap 600® was up 0.18% in March and had a YTD return of -5.93%.
March Madness marched on, as the S&P 500 scored a three-pointer, up 3.58% for the month and up 8.62% from its recent March 8, 2022 low. While the month left the index off 4.95% for Q1 (and YTD; down 5.55% from the 2022 opening day closing high), the game continued under heightened interest rates (which now appear to be scheduled) and prices (which appear to be constantly increasing), as consumers continued to roar from the sidelines, with concerns that their voice (willingness to spend, compared to their ability to spend) may get sore (and threaten the score).
While the market was our monetary center of attention, the dominating news story issue was the continuation of the Russia-Ukraine conflict. At month’s end, there were some positive signs that talks may lead to an end (but not immediately); the world has been changed, as likely will future planning, events and reactions.
As for the market fundamentals, earnings, sales, dividends and buybacks posted records for Q4 2021, while cash flow and cash resources fell short of records but remained impressive. All 11 S&P 500 sectors were positive for the month (with 315 issues up and 81 up at least 10%), as the market traded past higher interest rates and inflation, with limited impact from the Ukrainian situation (though some attention is being paid to companies that may participate in an eventual rebuild). The turnaround still left the YTD return down 4.95% (after 2021’s 26.89% gain, 2020’s 16.28%, 2019’s 28.88% and 2018’s -6.24%), as Energy stocks remained hot, up 37.66% YTD, with Utilities the only other sector in the black (up 3.96%). Breadth was also negative, with 192 up and 94 up at least 10%, and 312 down, as 181 issues were down at least 10%.
April, which hopefully extends April Fool’s Day (up 67% of the time, compared with 52% for all days) to equity holders, is scheduled to focus on earnings, as over two-thirds of the issues will report by the end of the month, along with their updated guidance for 2022 (and the impact of inflation and supply issues). Unscheduled is the Ukraine situation and politics, with the key question being consumers’ reaction to rising prices.
The S&P 500 closed at 4,530.41, up 3.58% (3.71% with dividends) from last month’s 4,373.94, when it was down 3.14% (-2.99%) from the prior month’s 4,515.55 close, when the index was down 5.26%
(-5.17%). The index was down 4.95% YTD (-4.60%), and the one-year period was up 14.03% (15.65%); it was up 33.79% (38.35%) from its pre-COVID-19 Feb. 19, 2020, closing high. The Dow® ended the month at 34,678.35, up 2.32% (2.49% with dividends) from last month’s close of 33,892.60, when it was down 3.53% (-3.29%) from January’s close of 35,131.86, when it was down 3.32%
(-3.24%), and from December 2021’s close of 36,338.30, when it was up 5.38% (5.53%). The YTD period was down 4.57% (-4.10%), and the one-year period was up 5.24% (7.30%).
The S&P 500 reversed course in March, as it adjusted to current and future events: Russia-Ukraine, seven possible interest rate hikes (with the potential of them not all being 0.25% each), and continued inflation—but potentially an end in sight (H1 2023). For the month, the index posted a 3.58% gain, after opening the year with back-to-back declines (-3.14% and -5.26%). Volatility decreased, as inflation concerns replaced COVID-19, and then global conflict replaced inflation, with inflation again ahead at month's end, while intraday volatility (high/low) averaged 1.70%, compared to February's 1.87% (January was 2.06%, as 2021 was 0.97%). Since Biden won the Nov. 3, 2020, U.S. election, the index has gained 34.47% (37.30%), with 69 closing highs since his Jan. 20, 2021, inauguration. The bull market was up 102.49% (108.96%) from the low on March 23, 2020. The index closed 5.55% down from its Jan. 3, 2022, 4,796.56 closing high.
Q4 2021 earnings and sales have not just beat expectations (as they did in Q1, Q2 and Q3 of 2021), but they set new quarterly records. For the quarter, 378 issues have beaten operating estimates (75.6%), with 102 missing and 20 meeting, as 389 (78.0%) have beaten on sales. Q4 2021 posted a preliminary 9.0% increase over Q3 2021 and a 48.5% increase over Q4 2020. For 2021, the year posted a 70.1% gain over 2020, with the 2021 P/E at 21.8, after 2020’s 22.1% earnings decline over 2019.
President Biden gave his State of the Union address, emphasizing his response to the Russia-Ukraine conflict and his plans to reduce rising costs, and he outlined progress on COVID-19 and current spending programs before Congress.