by Don Gould and Scott Smith, CFA

Note: This post is an excerpt from Gould Asset Management’s Economic and Market Review for the First Quarter of 2015, the entirety of which can be found here. We’ve reprinted it here for the benefit of our blog subscribers.

US stocks got off to a cooler start in 2015, with the S&P 500 index rising a modest 1.0% in the first quarter. For some investors, this might have seemed a bit of a letdown, given the fourth quarter’s 4.9% return and 2014’s full-year return of 13.7%. Glass half-full investors, on the other hand, would point out that this was the ninth consecutive positive quarter for US stocks—a remarkable run and the longest such streak since 1998. Like all streaks, this one will eventually end, but how and when is anyone’s guess.

Illustrating just how difficult it can be to predict US market movements, we seem to be in that odd environment where bad economic news is good market news, and vice versa. This contradictory state reflects the impact of Federal Reserve monetary policy on stock prices—investors hope that weak economic data delays the Fed’s eventual rate hikes, while strong economic signals hasten it. How much longer the proverbial punch bowl of easy money and low interest rates persists will be a key factor in near-term performance, since the varying expectations are clearly having a large effect on the US stock market.

To continue reading, please see our entire Economic and Market Review here (link will open in a new window).