Markets Look to Carry Momentum into 2020
Sources: Sources for data in tables: Equity Market and Fixed Income returns are from JP Morgan as of 12/27/19. Rates and Economic Calendar Data from Bloomberg as of 12/27/19. International developed markets measured by the MSCI EAFE Index, emerging markets measured by the MSCI EM Index. Sector performance is measured using GICS methodology.
Global equity markets finished higher during the holiday shortened week. In the U.S., the S&P 500 Index increased 0.60%, the Dow Jones Industrial Average advanced 0.67%, and the NASDAQ gained 0.92%. On the international equities front, developed and emerging markets rose by 0.77% and 1.21% respectively. Finally, the 10-year U.S. Treasury yield finished the week at 1.88%.
The “Santa Clause Rally” appeared to be in effect this year as all three major U.S. averages, as mentioned above, recorded all-time highs during the week. Trade with China has remained in focus while tariff rollbacks and easing rhetoric continued to help move markets higher. More recent reports even indicate that a Chinese trade delegation will visit Washington this weekend to sign the “phase one” accord. However, official confirmation has not come out yet from either side.
As we move closer to the New Year, we see additional upside potential for U.S. stocks, particularly during the first half of 2020. A dovish Federal Reserve, along with the continued strength of the U.S. consumer and underlying U.S. economy have the potential to support markets. However, as we begin the second half of the New Year and enter the thick of the election cycle, periods of intermittent volatility are to be expected. Regardless, we continue to encourage investors to stay disciplined and work with experienced financial professionals to help manage their portfolios through various market cycles within an appropriately diversified framework that is consistent with their objectives, time-frame, and tolerance for risk.
Best wishes for a happy and healthy New Year to everyone!
Investing in foreign securities presents certain risks not associated with domestic investments, such as currency fluctuation, political and economic instability, and different accounting standards. This may result in greater share price volatility. These risks are heightened in emerging markets.
There are special risks associated with an investment in real estate, including credit risk, interest rate fluctuations and the impact of varied economic conditions. Distributions from REIT investments are taxed at the owner’s tax bracket.
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MSCI- EAFE: The Morgan Stanley Capital International Europe, Australasia and Far East Index, a free float-adjusted market capitalization index that is designed to measure developed-market equity performance, excluding the United States and Canada.
MSCI-Emerging Markets: The Morgan Stanley Capital International Emerging Market Index, is a free float-adjusted market capitalization index that is designed to measure the performance of global emerging markets of about 25 emerging economies.
Russell 3000: The Russell 3000 measures the performance of the 3000 largest US companies based on total market capitalization and represents about 98% of the investible US Equity market.
ML BOFA US Corp Mstr [Merill Lynch US Corporate Master]: The Merrill Lynch Corporate Master Market Index is a statistical composite tracking the performance of the entire US corporate bond market over time.
ML Muni Master [Merill Lynch US Corporate Master]: The Merrill Lynch Municipal Bond Master Index is a broad measure of the municipal fixed income market.
Investors cannot directly purchase any index.
LIBOR, London Interbank Offered Rate, is the rate of interest at which banks offer to lend money to one another in the wholesale money markets in London.
The Dow Jones Industrial Average is an unweighted index of 30 “blue-chip” industrial U.S. stocks.
The S&P Midcap 400 Index is a capitalization-weighted index measuring the performance of the mid-range sector of the U.S. stock market, and represents approximately 7% of the total market value of U.S. equities. Companies in the Index fall between S&P 500 Index and the S&P SmallCap 600 Index in size: between $1-4 billion.
DJ Equity REIT Index represents all publicly traded real estate investment trusts in the Dow Jones U.S. stock universe classified as Equity REITs according to the S&P Dow Jones Indices REIT Industry Classification Hierarchy. These companies are REITs that primarily own and operate income-producing real estate.