The first quarter of 2018 brought significant stock market volatility not seen since 2015. Twice during the quarter, the Dow Jones industrial average dropped more than 1,000 points, and twice it had a daily gain of more than 500 points. The Dow finished the quarter at 24,103, down 3.0% for the quarter, and ranged from 23,533 to 26,617 – a 13.1% spread between the high and the low.
Interest rates were higher across the board, though down from the peak during the quarter. The Federal Reserve increased the Fed Funds rate to 1.50% in the January meeting and 1.75% in the March meeting. Notably, in the January meeting, the Fed held the interest rate paid on required and excess reserves at 1.50%, making it equal to the Fed Funds target rate for the first time since 2008. This was a significant step in the Fed’s normalization process, which led to a 6.0% decrease in excess reserves since January. The Fed will meet again on May 2, and futures are predicting no change in interest rates.
Oil prices, based on West Texas Intermediate, increased 8.5% for the quarter to $64.94 per barrel, while average gasoline prices were up 7.1%. Gold prices were up 2.4%, while silver prices were down 2.9% for the quarter.