The uneventful first quarter result of +1.35% for the S&P 500 does not tell the whole story as to how 2016 has the dubious honor of having the worst start for U.S. equity markets in stock market history. Of course, it did not end there. The Dow Jones Industrial Average (DJIA) broke well below our support level of 16,000 before experiencing a strong recovery in equity prices resulting in one of the most volatile quarters since 2009. We see that overall projected earnings growth for the current fiscal year is positive relative to last year, but our observance of overwhelming negative earnings adjustment trends causes us to believe that 52 week highs established in 2015 may represent a challenging ceiling for 2016. For the rest of this year, we expect a DJIA trading range between 16,000 and 18,000 based on fundamentals and any oversold or overbought situation will be driven by market sentiment.
As mentioned in our prior commentary, our conservative year-end cash allocation contributed to a slight drag on portfolio returns for 2015 but proved to be beneficial in weathering the extreme volatility during the first quarter. What appeared to be an endless bombardment of negative news finally subsided when calmer minds started to prevail over the thickness of doom and gloom. Some of the catalysts contributing to the turnaround from oversold conditions include strength in oil prices, signs supporting a positive, yet questionable, employment outlook and a friendly interest rate environment with expectations of fewer rate increases for this year. In the face of confusing data, the Federal Reserve remains diligent in tracking employment and inflation factors as it determines the future path of interest rates but is exhibiting common sense as it weighs weak global economic factors against positive economic signs in the U.S.
Global concerns certainly have not changed and our expected trading range for U.S. equity markets reiterates our focus on dividend yielding stocks as well as other income generating investment vehicles. We remain cautiously bullish on U.S. equities. Even though large cap companies represent the core of our client portfolios, we believe that small and mid-cap companies will have an opportunity to outperform due to favorable valuations and reduced exposure to a strong dollar. Our other areas of interest include real estate investment trusts (REITs), high-yield bonds, and the biotech/pharmaceutical sector. REITs and high-yield bonds are attractive due to significant income with appreciation potential supported by sector stability (REITs) and future participation in an oil & gas industry recovery (high-yield bonds). Current valuation in the biotech sector presents opportunities for the long-term after sustaining heavy losses for the year while pharmaceutical companies provide steady dividends. Please reach out to your consultant should you have any questions regarding your portfolio.
Lastly, I would like to welcome Nick Sun, who has joined our Portfolio Management Operations on a full-time basis as a Portfolio Strategist. He will be a great asset in fulfilling our commitment to protecting and growing our client portfolios. Also note that two Round Table Discussion (RTD) events have been scheduled for April, one in Berwyn and one in Lancaster. The RTD in Lancaster will be our first in the area and will be hosted by our colleague, Bob Habig. Please reach out to Leslie Tritschler @ 484-320-6300 to reserve a seat at either event.