Market Beat: 2019 a good year on the market
Last year was good year for investors. The S&P 500 had a gain of 28.88% for the year. The Dow Jones Industrial Average was up 22.34%. The NASDAQ did even better with a gain of 35.23%, it was a good year for technology stocks. Record highs were hit for all three of those indexes.
Technology was the best performing sector, followed by Industrials. Energy was the worst performing sector for 2019.
Foreign markets did pretty well, too, though they weren’t quite as strong as the United States. The EAFE, which stands for Europe, Asia and the Far East rose by 18.44%. The MSCI Emerging Markets Index was up 15.43%.
Bonds had a relatively strong year as well. The Bloomberg Barclays Global Aggregate Index had a gain of 6.84%. This index represents investment grade bonds from all over the world. The TLT which is the long term US Treasury bond ETF had a gain of 14.12%. The IEF, the intermediate term US Treasury bond ETF was up 8.03% as interest rates fell during the year.
It was also a good year for precious metals. The gold ETF, GLD grew by 17.86% and the silver ETF, SLV had a gain of 14.88%.
Looking ahead there is quite a bit of uncertainty for this year. Corporate earnings are forecast to grow in 2020 and that will be something that the market will pay close attention to. Earnings growth has been contracting and if that continues it will be a disappointment. Earnings reporting for the last quarter of 2019 will get going in full swing over the next few weeks. The market is fully valued at this point, the forward PE or price to earnings ratio is above both the five and the ten year average.
Geo-political events like the recent unrest in the Middle East could have an impact, if they escalate. The outcome of the election here in the U.S. can affect the stock market, too. The Fed will probably hold interest rates steady and continue with the easing that they’ve been doing recently due to activity in the repo market.
The U.S. economy is continuing to grow, but we are seeing some signs of it slowing down. The ISM Manufacturing Index recently dropped to 47.2. Any reading below 50 indicates contraction. We’ll have to wait and see what happens this year, this has been one of the longest running bull markets in history.
Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information is at his blog at http://iwcasset.com or 775-657-8065. The mention of securities should not be considered an offer to sell or solicitation to buy investments mentioned. Consult your investment professional to understand the risks and/or how the purchase or sale of these investments may be implemented to meet your investment goals. Past performance is no guarantee of future results.