Market Update - March 2016

After a shaky start to the year, March rewarded patient investors with the returns they had been waiting for. The MSCI All Country World Stock Index wiped out losses from earlier in the year, rallying 7.6%. The S&P 500 advanced 6.8% and U.S. small stocks (Russell 2000) were up 8.0%. Emerging markets had their best performing month in years, surging 13.2%. Bond returns were overshadowed by the move in stocks but were still positive across the board. Continuing with the good news, REITs were up 9.6% and commodities gained 3.8%. Managed futures declined 1.5%.


  • The final estimate of fourth quarter real GDP was 1.4%. This is an upward revision from the initial estimate of 0.7%.
  • The year‐over‐year inflation rate fell to 1.0%. Decreases in the indexes for energy and food were the largest detractors for the month.
  • The U.S. economy posted healthy job gains of 215,000 in March. However, the unemployment rate ticked up to 5.0% as more workers re‐entered the labor force.


  • The S&P 500 index jumped 6.8%. U.S. small stocks (+8.0%) outperformed large stocks, and U.S. small value stocks did even better (+9.0%).
  • International large stocks closed the month up 6.5%. International small stocks gained 8.4%.
  • Emerging markets was the best performing asset class, up 13.2%. Large gains of 30.5% and 18.0% in Brazil and South Africa drove the index further from recent lows.


  • The 10‐year U.S. Treasury yield remained relatively unchanged at 1.8%.
  • Intermediate‐term bonds and international bonds both gained 0.7%, and TIPS were up 1.8%.


  • Managed futures declined 1.5% but have maintained strong positive performance year‐to‐date (+4.8%).
  • REITs jumped 9.6% and commodities gained 3.8%, bringing both back into positive territory for the year.

The Bull Market Turns Seven
We are in one of the longest‐running, biggest wealth producing bull markets in history. But when you see the gloomy headlines in the financial news media, this can be easy to lose sight of. On March 9, the bull market in U.S. stocks (S&P 500) celebrated its seventh year. The index has risen nearly 200% since closing at 676.53 on March 9, 2009. During that time the Nasdaq 100 has gained over 300% and corporate earnings are up 148% from the first quarter of 2009.

So why hasn’t this bull market gotten more respect? For one, the S&P 500 has pulled back from its record high set in May 2015. The market has experienced more volatility, with two separate drops of more than 10% between then and now.

Perhaps more importantly, the recovery from the Great Recession has been incremental and below the recovery rate from previous recessions. Wages have not outpaced inflation, which means that many people don’t feel wealthier today than they did seven years ago. And the investors who didn’t trust stocks and sat on the sidelines waiting for a clearer sign of recovery missed out and are not any wealthier today than they were back then.

So as we wish the current bull market a happy birthday and hope for many more, don’t be lulled into complacency when the positive returns of bull markets persist. It’s also important to ignore bear market fear mongering. There have been “experts” proclaiming inevitable crashes ever since the last bear market ended seven years ago. Regular rebalancing and re‐evaluating your asset allocation when your goals and risk tolerances change may help you avoid the long‐term damage that can be caused by trying to guess how the market will perform in the short term.

Sources: Bureau of Economic Analysis (BEA), Federal Reserve, Institute for Supply Management, JP Morgan, Morningstar Direct, Standard and Poor's, Wells Fargo, Yahoo! Finance, BofA Merrill Lynch,, Bob Veres

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