4th Quarter Market Commentary

2 Minute Read

The market continued its rally through the fourth quarter of 2019, helping to finish off one of the best years since 2013.  Here are the 4th Quarter and Full Year 2019 returns of several notable assets:

Asset Class/Index

4th Quarter 2019 Full Year 2019

S&P 500 (Large US Stocks)

9.07%

31.49%
Russell 2000 (Small US Stocks)

9.94%

25.52%

MSCI World (Developed Foreign)

8.17% 22.01%
MSCI EM (Emerging Foreign) 11.84%

18.42%

US Core Bonds

0.49% 6.84%

Gold

1.98%

18.43%

Silver 4.58%

16.68%

Brent Crude Oil

15.53%

34.83%

Source Kwanti

The Year 2019 in Review

An outstanding year for the markets, coming off a down 2018 where investors experienced multiple pull backs.  While many outlets were predicting a recession and more losses for investors in 2019, these were my words to clients in last year’s 4th quarter market commentary following a 13.5% decline in the S&P 500:

“Short-term declines in markets almost always have an element of fear involved.  Sudden pullbacks can cause investors to become anxious and sell their stocks, which in turn creates further downward pressure, more selling, and so on.  Longer term, markets will revert back to the fundamentals of the companies themselves and the economy.  As of this writing, company fundamentals and the economy are still showing signs of strength.”

While I do not anticipate another 30% plus return in the S&P 500, recent economic data continues to point to a strong US economy going into 2020.  While any number of events could knock the US economy off track, the markets have continued to reward patient, long-term investors who ride out the ups and downs.

Looking Ahead

While impeachment and the upcoming presidential election will be dominating the headlines in 2020, the markets will most likely be taking their cues from The Fed, Consumer Spending, and Corporate Earnings.

The Fed – They have continued along the path of an accommodative monetary policy, and I am expecting a quiet year from them, with neither rate hikes nor rate reductions likely.

Consumer Spending – You and I spending money is the most significant driver of US economic growth, making up approximately 70% of our economy.  Any drop-off in consumer spending could cause the markets to pause and/or pull back.

Corporate Earnings – S&P 500 earnings growth is expected to come in around 8-10% for 2020.  Earnings growth either above or below that projection could have effects on markets in 2020.

If you have any questions at all, please do not hesitate to contact the office.  Have a great week!

Best,

Clint

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