This quarter's rally is characterized by three factors: a sharp rebound off the Christmas Eve lows, increasing optimism in U.S.-China trade talks and a sharp reversal in the Federal Reserve's monetary policy stance.
"The irrational moment of December was just that, a moment driven by tax selling, algorithms and people being extremely emotional about the headlines," said Phil Blancato, CEO of Ladenburg Thalmann Asset Management. But "while December was oversold, January and February were overbought. The reason why is, while stocks got cheap for a brief amount of time, the economy is not strong enough to drive a 12 percent return on the stock market in an environment like this."
Concerns over a possible economic slowdown have thrown some cold water on the rally as global economic data continue to deteriorate. This has pushed down bond yields across the world. Recently, the Treasury 10-year note yield hit its lowest level since December 2017 and moved below its 3-month counterpart for the first time since 2007. This is known as a yield-curve inversion and investors see it as a sign that a recession may be on the horizon.
"When you look at the full quarter, the thing that stands out the most is the divergence in the direction of the stock markets across the world and the direction of the 10-year bond in the U.S. and in other countries," said Tom Martin, senior portfolio manager at Globalt. "The data is poor. Interest rates have gone down as a reflection of that and expectations for future economic growth have also declined."
The Atlanta Federal Reserve's GDPNow tool forecast economic growth of 1.5 percent for the first quarter, well below the 2.2 percent print for the fourth quarter of 2018.
Earnings growth for the first quarter is also expected to be lackluster. FactSet data show analysts expect first-quarter S&P 500 earnings to fall by 3.7 percent on a year-over-year basis. Data from The Earnings Scout show analysts expect earnings growth to recover in the later quarters of the year, however.
Linda Duessel, senior equity strategist at Federated Investors, is still not worried, however.
"There is no reason to believe we won't experience a so-called soft landing in the economy, particularly if the Fed is at bay," Duessel said. "The bottom line is, if we can get to the end of the year and say inflation is benign and the Fed is still at bay, then I can say with some confidence, there is no recession on the horizon. This will be by August the longest economic cycle in the history of the land and will continue for longer than many people think."
—CNBC's Sam Meredith contributed to this report.