US equity markets just had their best first quarter since 1998. The S&P 500 (SPY) rose 13.1%, while the NASDAQ Composite (QQQ) rose almost 16%. The Dow Jones Industrial Average (DIA) also saw double-digit gains in the first quarter. The Dow Jones had its best January in 30 years.
Before the first-quarter rally, the fourth quarter was dismal. US stock markets had the worst fourth quarter in a decade. The headlines looked even more depressing. The losses in December were the worst since the Great Depression. According to CNBC, the markets closed in the red last year after being positive in the first three quarters.
In the fourth quarter, the sell-off that started in October only intensified in December. However, there was a small relief rally before the end of the year. The formidable FAANG pack was also under pressure in the fourth quarter. Apple (AAPL) fell more than 30%.
However, the markets’ fortunes have changed this year with a broad-based rally. Even commodities have joined the party after getting crushed last year. The bullish undertone was visible around the globe.
The markets’ 2019 outlook wasn’t really as bearish as some observers expected in the fourth quarter. As we noted in Key Themes to Watch after a Dismal 2018, the markets were too pessimistic about the global economy’s outlook. Several fund managers advised buying stocks after the sell-off in December.