Wall Street posted its first losing quarter in two years

“…Then dawn sets over the day. Nothing golden can remain.” So wrote the poet Robert Frost in the fourth quarter of 1923, and so said the stock market in the first quarter of 2022.

For the first time in two years, the three major Wall Street indices ended a losing quarter on Thursday. Against a backdrop of searing inflation, rusty supply chains, rising interest rates, theater of war and a two-year-old pandemic, most analysts view the future with caution.

What goes up must come down?

The reasons markets are falling can be seen anywhere these days. Go to a McDonald’s and pay 6% more for a Big Mac than a year ago. Get on the subway and see people wearing N95 masks. Fill up at the pump and feel like you just got robbed. Turn on CNN and see the war on the ticker, assuming they’re done obsessing over Will Smith. Try buying a PlayStation 5 or get a mortgage rate below 4% (good luck!).

The important question is whether all the macro hurdles facing markets mean more choppy waters ahead, or whether a rally in the second half of March means the opposite:

  • The Dow and S&P 500 fell about 3% and the Nasdaq more than 7% in the first three months of 2022. It was their first negative quarter since the first quarter of 2020, when the Covid pandemic started in the United States.
  • But the S&P 500 and Nasdaq ended March up 5% each, and the Dow Jones rose 4%. Still, the S&P 500 has fallen 35 days this year, the most in the first quarter since 1984, according to data from Bloomberg.

Hot Takes: “We believe that from here investors will, at some point, realize, wait a second, that growth is slowing and interest rates are going up and inflation is still high,” he told CNBC Erik Knutzen, CEO of Neuberger Berman. “It’s still a tough setup for equities.” Cliff Asness, CIO of investment fund AQR Capital Management, tweeted that the numbers are exaggerated: “Lots of stories about how the ‘S&P is heading for its worst quarter in two years’ where they make it look like It’s an important thing. It’s the worst of [eight quarters]a small sample, and the S&P is only down 3.52%.

Homeless: The bond market, traditionally seen as a safe haven when stocks are risky, has not lived up to that reputation. The Bloomberg US Aggregate bond index – which tracks US Treasuries and investment grade corporate bonds – posted a negative return of 6% this quarter, the worst since 1980.

Someone must make money: At least someone is enjoying that feeling of being robbed at the pumps. The S&P GSCI, which tracks commodity futures including oil, rose 34% in the first quarter, the biggest increase since 1990.

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