2018 is ending, and that leaves just a single trading holiday on January 1 before we get back into a full year of the stock market. For many investors, 2018 has been a year to forget, at least in the second half. High volatility caused by trade tensions, rate hikes, and sector slowdowns has left many investors hungry for good news.
For many analysts, that good news is on the horizon.
Chinese trade tensions are easing, and negotiations are currently ongoing to complete a new trade deal by March 1. China has already taken some positive steps, particularly with its recent move towards ending forced technology transfers.
The Federal Reserve has suggested that there will be fewer rate hikes in 2019, which could help to promote certainty in the economy. The economy overall is still expected to grow, even though it won’t be moving as quickly. That means no recession on the horizon, which should be a relief for investors.
Post-Christmas trading has been extremely positive, and while it doesn’t signal any guaranteed end to widespread volatility, it’s a good start as the new year approaches.
If you’re starting to consider your portfolio options for the next year then it’s best to start with a high-level view. Here are three sectors to watch in 2019.
E-commerce continues to grow as consumers take advantage of the convenience and cost saving of online shopping. Amazon (NASDAQ: AMZN), the world’s most valuable E-commerce company, had its best ever holiday quarter this year. Even ancillary companies like WestRock (NYSE: WRK) could benefit from the continued expansion of E-commerce in the U.S.
Chip manufacturing slowed down this year, but stocks slid disproportionately. This has left many of the most popular tech stocks well below target values. Most top analysts are confident that strong tech will come back, including companies like Nvidia (NASDAQ: NVDA) and Intel (NASDAQ: INTC). Service companies in the sector also have strong potential, including Lam Research Corp: (NASDAQ: LRCX).
Oil prices are starting to creep up again. Energy stocks are currently undervalued and there are bargains to be found. Chevron (NYSE: CVX) and Exxon Mobil (NYSE: XOM) are both down year to date but could come back strong in 2019. BP (NYSE: BP) is another good option, especially considering the extremely high dividend yield of 6.29%.
Nothing is ever certain in the stock market, but signals for the new year are promising. Life remains in this market, and careful stock picks based on existing evidence and emerging market signals could allow for strong portfolio growth in the new year.
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