The S&P 500 clinched its best first quarter in more than two decades.
The S&P 500 (^GSPC) rose 0.67%, or 18.96 points, as of market close. The Dow (^DJI) rose 0.82%, or 211.22 points, while the Nasdaq (^IXIC) rose 0.78%, or 60.16 points.
As of market close Friday – the last day of trading for March – the S&P 500 posted its largest advance in the first three months of the year since the first quarter of 1998. The S&P 500 is up 13% for the year-to-date in 2019.
The last time the index rose more on a percentage basis in the first three months of the year was in 1998, when the S&P 500 advanced 13.53% in the first quarter.
Even after their strong start in 2019, stocks could still have further to rise in the coming months, based on historical precedent.
The S&P 500’s 7.9% rally this January was one full standard deviation above January’s average return of 1.2% since 1958, Datatrek co-founder Jessica Rabe pointed out in a report. In the eight years ahead of 2019, whenever the S&P 500 returned more than one standard deviation above average in January, the index rose an average of 2.2% in April and was positive in 60% of those years. And in May of those years, the S&P 500 advanced an average of 1.9% and was positive 75% of the time.
U.S.-China trade deal optimism has continued to buoy stocks. Futures rose overnight after U.S. Treasury Secretary Steven Mnuchin wrote in a Twitter post that he and U.S. Trade Representative Robert Lighthizer had concluded “constructive trade talks in Beijing.” He added that he looks forward to welcoming Chinese Vice Premier Liu He to continue discussions in Washington, D.C. next week.
Meanwhile, U.S. Treasurys began to stabilize Friday, with Treasurys across the curve mostly higher. The yield on the 10-year note rose 2.1 basis points to 2.41%, while the yield on the 3-month bill edged down 3.9 basis points to 2.398% as of 4:25 p.m. ET.
The British pound slid after the U.K. Parliament voted down prime minister Theresa May’s Brexit deal for a third time on Friday, as had been expected. The pound fell to below $1.30 against the dollar (GBPUSD=X) just following the vote, after earlier in the session being higher than $1.31. The results of the latest vote mean May will have to spell out a path forward for the U.K. to exit the EU by an April 12 deadline or depart without a deal, based on the recent Brexit extension the EU granted earlier this month.
Lyft IPO
Investors closely monitored Lyft’s performance as shares of the No. 2 ride-hailing company in the U.S. began trading on Friday.
Lyft (LYFT) shares began trading at 11:49 a.m. ET on the Nasdaq at $87.24 each, or 21.17% ahead of its pricing at its initial public offering. As shares began trading Friday, Lyft opened with a $29.88 billion valuation.
By the end of the day, shares were trading at $78.29 each, or 8.74% above its IPO price. Shares reached as high as $88.60 each during intraday trading.
Lyft leads a stampede of tech “unicorn” companies – or those with a private valuation north of $1 billion – set to hit the public markets this year. The company priced its initial public offering at $72 per share on Thursday, raising more than $2 billion and valuing the ride-hailing giant at more than $24 billion on a fully diluted basis.
“Exciting IPOs like these tend to drive a ton of interest in folks who typically are not entirely engaged with the market. Although, before investor go all in, there are some considerations. Keep in mind Lyft and IPOs on the docket have no track record to speak of and have yet to turn profit,” Mike Loewengart, vice president of investment strategy at E-Trade, wrote in an email. “That said, as we look back on the trajectory of the FAANGS, there could be opportunity here if you can stomach the potentially rocky ride.”
Wall Street firms have already snapped up Lyft’s initial public offering, with the IPO coming in at a pricing higher than the company’s previously anticipated range of between $62 and $68 per share. Some brokerages have already initiated coverage of the firm, which beat ride-hailing leader Uber to the public markets.
How much is Lyft worth?
Some analysts note that the packed IPO market for 2019 – which is expected to later include other tech heavyweights including Uber, Pinterest, Slack and Palantir – reinforces the resilience of the bull market this year as companies bet on investors’ willingness to pour capital into their firms.
Others, however, have suggested that it could mean early investors in the firms are concerned about a forthcoming downturn, and are trying to cash out on their positions now.
“If you go public...and you get $20 a share and the market is willing to pay you that, it’s not that it’s not important what the market’s going to be like in a year, but you basically sold at $20 a share,” Brian Hamilton, co-founder of fintech company Sageworks, said in an interview with Yahoo Finance. “But if you’re a buyer, now you buy something and have the holding risk. So then you really have to look at what the economy is going to do and where everything is going to be.”
Some are more skeptical. David Ethridge, PwC managing director and former head of capital markets at the NYSE, said in an interview with Yahoo Finance, “The view that the people inside these companies have some better crystal ball, I just don't believe it.”
“I think it's more about where the business models are and the benefits of being public,” he said.
