Is worst quarter for stocks since ’15 a red flag?

For now, Wall St. takes wait-and-see approach

Stocks marched backward in March, leaving a jittery Wall Street debating whether the market madness that resulted in the first quarterly loss since 2015 is just a short-term blip or a sign of more losses to come.

The broad Standard & Poor’s 500 fell 1.2% in the first quarter, snapping a nine-quarter stretch of gains.

After racing to 14 record highs through Jan. 26, U.S. stocks were undermined by fears about a trade war and jitters about rising interest rates and the user data privacy crisis engulfing Facebook and other social media companies. There was one glimmer of hope, however: stocks rallied sharply on the final trading day of the month. Should 401(k) investors be worried?

❚ The negatives: Stocks could continue to struggle if the trade fight between President Trump and China goes from what is now a tit-for-tat tariff squabble to a full-blown economic war, as that could imperil the global economic recovery.

Tech stocks could continue their bumpy ride if Facebook can’t contain the fallout from its data scandal, regulatory scrutiny of social media companies intensifies and new rules are enacted that hurt profitability. A continued decline in tech, an industry group that slid 4% in March, would hurt the broader market because tech makes up about 25% of the S&P 500.

❚ The positives: The stock market is heading into earnings reporting season, and Corporate America is expected to post strong numbers. Wall Street analysts have been aggressively boosting profit forecasts due to the expected benefits from the big tax cuts businesses received from the new law.

Profits for S&P 500 firms in the first three months of 2018 are forecast to grow 18.5%, up sharply from an earlier estimate of 12.2% on Jan. 1, earnings tracker Thomson Reuters says.

April historically has been a good time to own stocks. It has been the topperforming month for the Dow Jones industrial average in the last 50 years, posting average gains of of 2.04%, according to Bespoke Investment Group.

Even more encouraging is returns in April are even bigger after a decline in the year’s first quarter. The S&P 500’s average return was 2.31% in April in the 10 years since 1983 when the largecompany stock index fell in value in the first three months of the year.

Consumer confidence also remains strong, with unemployment low at 4.1% and wages edging higher after years of stagnation.

As a result, consumers should continue to spend.