January 9th, 2019 | Miller Advisors
While the global equity markets enjoyed one of their best years in 2017, 2018 offered a different story, bookended by early- and late-year volatility. The last week in December, for example, saw stocks attempt a rebound from the edge of bear market territory. According to Bloomberg data, it was the first time since May 2010 that the S&P 500 had posted such a large reversal.
This year told a tale of trade conflicts with China, the intensifying Mueller investigation, geopolitical tensions, government shutdowns over the budget and the possibility of slower economic growth amid higher interest rates. While we’ve seen some progress on trade talks with China, there are still contentious issues to be ironed out, explains Raymond James Washington Policy Analyst Ed Mills.
This is the first year in nearly a decade in which most major asset classes will end in negative territory, notes Peter Greenberger, Raymond James Director, Mutual Fund & 529 Plan Product Management. A particularly turbulent December brought almost daily gyrations, with the three major domestic indices ping-ponging between gains and losses.
12/29/17 Close | 12/31/18 Close | Change Year to Date | % Gain/Loss Year to Date | |
DJIA | 24,719.22 | 23,327.46 | -1,391.76 | -3.48% |
NASDAQ | 6,903.39 | 6,635.28 | -268.11 | -2.84% |
S&P 500 | 2,673.61 | 2,506.85 | -166.76 | -4.38% |
MSCI EAFE | 2,050.79 | 1,719.94 | -330.85 | -13.79% |
Russell 2000 | 1,535.51 | 1,348.56 | -186.95 | -11.01% |
Bloomberg Barclays Aggregate Bond | 2,046.37 | 2,046.60 | +0.23 | +0.01% |
Here is a look at what’s happening in the economy and capital markets, as well as key factors we are watching:
Economy
Equities
Fixed Income
International
Bottom Line
Source: Raymond James
Image Source: iStock
Performance reflects total returns, including dividends/interest, as of 4:30 ET on 12/31/2018. Investing involves risk, and investors may incur a profit or a loss. All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc., and are subject to change. Past performance is not an indication of future results and there is no assurance that any of the forecasts mentioned will occur. The process of rebalancing may result in tax consequences. Economic and market conditions are subject to change. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 is an unmanaged index of small cap securities. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. An investment cannot be made in these indexes. International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets. Small and mid-cap securities generally involve greater risks. Companies engaged in business related to a specific sector are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification. The performance noted does not include fees or charges, which would reduce an investor’s returns. Asset allocation and diversification do not guarantee a profit nor protect against a loss. Debt securities are subject to credit risk. A downgrade in an issuer’s credit rating or other adverse news about an issuer can reduce the market value of that issuer’s securities. When interest rates rise, the market value of these bonds will decline, and vice versa. U.S. Treasury securities are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. The yield curve is a graphic depiction of the relationship between the yield on bonds of the same credit quality but different maturities. Chris Bailey is with Raymond James Euro Equities, an affiliate of Raymond James & Associates, and Raymond James Financial Services. Material prepared by Raymond James for use by its advisors.