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First Quarter in U.S. Stock Funds: The Return of Volatility

Growth stocks held on to small gains as Amazon continued to rise.

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The markets were jolted back to reality in the first quarter after the halcyon days of 2017.

Volatility returned with a vengeance, with the markets making some of their biggest moves in months. After going all of 2017 without a move of 2% or more in absolute terms, the S&P 500 had six such moves in the first three months of 2018, capped by a 4% decline on Feb. 5. Simmering inflation fears, the prospects of a trade war with China, and revelations of  Facebook's (FB) data-harvesting activities roiled the markets during the period. As a result, the S&P 500 fell 2.1% during the quarter, its first quarterly loss since the third quarter of 2015. Small-cap stocks fared a bit better as a class during the market's swoons, though the Russell 2000 Index still lost 1.2% in the period.

Tony Thomas does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.