The 2019 Market year was anything but boring! After a historically bad end to 2018, in which the S&P 500 was down over 9% in December, the first quarter had its best start since 1998, up over 13%. The market continued to coast until May when slowing global economic growth and the on-going trade wars spooked investors. The market suffered a 6+% pullback in May. This proved to be a flash in the pan as the market recovered what it lost in June and July. August supplied more drama when the 2-year Treasury and 10-year Treasury yields inverted, which is often a recession indicator. Headlines swirled about a potential economic slowdown and the market dropped almost 2% in August. Again, this was short lived as the market recovered in September and then put its foot on the gas adding nearly 8.5% in the fourth quarter to finish up 28.9% for the year.
We find it a useful exercise to look back and reflect on the market and review what has driven performance. In 2019, we saw snapbacks from an oversold fourth quarter of 2018 and global economic headlines causing a stir in the market. We believe strong fundamentals such as corporate earnings and revenue growth continue to drive market valuations.
Looking ahead to 2020, we see many different challenges for investors that could cause market volatility including the 2020 Election, The Federal Reserve’s rate decisions and the on-going trade war with China. However, we continue to see a strong economy that is led by US consumers as they enjoy low unemployment, increased wage growth, continue to buy goods and services and take advantage of a low interest rate environment.
We will continue to manage our client’s investment portfolios with their financial plans in mind. If you would like to review your investment portfolio or your financial plan, please contact your advisor.