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With yesterday’s market close, the first quarter of 2015 is officially in the books. 2015 has been nothing short of interesting, with cheap oil, flat markets, surging biotech stocks, mega-acquisitions and much more.
Let’s take a look at the major markets and some of the more noteworthy charts in this first quarter recap.
The S&P 500
The S&P 500 closed out the first quarter at 2067.89, for a quarterly gain of just 0.44%, illustrated in the chart below.
There’s a lot of banter in the financial media right now about the high market valuation.
The S&P 500 ended Q1 with a P/E ratio of 19.52 and just 2.44% shy of its all-time high of 2119.59 set in early March. Though the market certainly isn’t “cheap,” I would argue that there are still tremendous values to be found, particularly within the energy sector.
It is worth noting that in 2014 the S&P 500 rose less than 1% during the first quarter and ended the year up around 12%.
The Nasdaq Composite
The technology heavy Nasdaq Composite Index fared only slightly better than the S&P 500 during the first quarter of 2015.
Technology Favorites
Three of the market’s favorite technology stocks are Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT) and Google (NASDAQ: GOOGL).
While Apple is riding the momentum from its Apple Watch launch and a host of other announcements, Google shares haven’t done much in 2015. Microsoft fell around 12.5% during the quarter.
Social Media
Social media stocks Facebook (NASDAQ: FB), Twitter (NASDAQ: TWTR) and LinkedIn (NYSE: LNKD) had drastically different results during the first quarter. The chart below illustrates the performance of each.
While Twitter has been by far the best performing social media stock, I worry about its valuation.
There’s no question that the microblogging service is an integral part of the way we find and share news and more, but I think its business model is the weakest of the three social media giants. And it certainly doesn’t justify a forward P/E of 82.
Regardless, Facebook is up just over 5% and LinkedIn is up just under 9%.
Biotechnology
Biotech remains one of the strongest sectors in the market. The iShares NASDAQ Biotechnology ETF (NASDAQ: IBB) rose 13% during the quarter, but this hardly tells the full story of exuberance within the sector.
The screen shot below shows the top 20 performing stocks of 2015 with a market capitalization greater than $300 million. I highlighted one of them. Why? Because it is the only stock on this list that isn’t a biotechnology stock.
The one non-biotech stock is a Russian steel company, Mechel OAO (NYSE: MTL). The stock has done so well in 2015 because it was added to a list of Russian companies being propped up – or “guaranteed” – by the Russian government. Think of it as “too big to fail,” only in Russian.
Google Translate says that would be “слишком большие, чтобы обанкротиться.”
Oil
Though the crashing prices of both Brent and WTI crude oil seem to have stabilized, both still fell during the first quarter.
Brent, illustrated below, fell by around 7%.
WTI fell by around 12%.
Whether or not oil prices will rebound later in 2015 remains one of the biggest question marks in the market right now. Speaking of which…
Energy
Hard hit by low oil prices and forced to reduce expenses, most oil stocks are way off from pre-crash levels. Even Exxon Mobil (NYSE: XOM) – an increasingly diversified energy company that is generally regarded as one of the best buy and hold stocks – continued to struggle during the first quarter of 2015.
It certainly didn’t help that Warren Buffett’s Berkshire Hathaway (NYSE: BRK-B) threw in the towel and sold its entire stake in the company – as well as ConocoPhillips (NYSE: COP) – during Q4 2014. The first quarter for those two stocks is illustrated below.
The U.S. Dollar
I’ll leave you with this: a chart illustrating more than 7% in gains for the U.S. dollar during the first quarter.
The rising dollar hurts the returns of foreign investments, and hurts companies that do a lot of business overseas. That said, it theoretically makes imports cheaper. It also makes it a lot more fun to travel overseas and convert to the local currency.
Cheap oil, the rising dollar and high valuations in several areas of the market are some of the major trends from the first quarter of 2015 that we will keep an eye on during the second quarter.
Here’s to another quarter in the books!
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