Stocks are coming off their best first-quarter performance in a dozen years, up 4.9 percent year-to-date, says Standard & Poor's. It's the fourth consecutive up quarter, the market's best streak since the five-quarter run that ended after the third quarter of 2007, based on the broad Wilshire 5000 index.
The quarter's gains might not seem like much, considering the jumps during the past three quarters as stocks roared back from bear market lows. Remember, though, that halfway through this quarter the market was on the verge of its first correction, or drop of 10 percent, since the bull market began.
The market's strong performance during the first quarter has some investors believing the momentum can last, especially because the first quarter historically hasn't been one of the market's best.
"It was a great first quarter," said Hugh Johnson of Johnson Illington Advisors. "Looks like this bull market and economic recovery has more to go."
Investors are picking apart the action in the quarter to get clues about:
• Momentum going into the second quarter. First quarters aren't usually the market's best, causing some to wonder if the follow-through could be better. Stocks have gained just 1.9 percent on average during the first quarters going back to 1945, says S&P's Sam Stovall. While that beats the average 0.5 percent gain during third quarters, it's a far cry from the 3.6 percent average gain in fourth quarters, he says.
"If you liked the first quarter, just wait until the second quarter," Stovall said.
• Hints of future pullbacks or corrections. The fact the first quarter rallied, faded and then recovered much like the fourth quarter is a signal stocks are ready for a setback, says Jeff Kleintop, market strategist at LPL Financial. Investors may decide to sell even if S&P 500 companies deliver the strong 70 percent year-over-year growth forecast when they report first-quarter earnings, he says.
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