The end of 2018 turned into a nightmare scenario for stock investors, with indexes approaching bear territory, and many of the top stock performance shedding their gains for the year. Before the post-Christmas rebound, the outlook was grim for 2019.
However, the momentum that started in late December was carried through into the new year, and now it looks like there could be a strong year of gains ahead.
The S&P 500 is an Important Benchmark to Consider
One of the most important indexes for tracking market health, the S&P 500 was weak throughout December. Cumulative losses were around 9% by the end of the year. However, almost all the losses have now been turned around. The S&P 500 is up 9.21% year to date, and current signals indicate that its strength will continue throughout the quarter.
Renewed confidence in tech and consumer stocks are increasing the bottom line significantly. Even some manufacturing industries have far outperformed expectations, particularly aerospace. Boeing (NYSE: BA) is a fitting example. It has gained 27.19% for the year to date, putting the stock up 17.83% when looking at data over the last 12 months.
The NASDAQ Is About to Leave Bear Market Conditions Behind
The NASDAQ Composite is another hugely important stock market benchmark. With the NASDAQ hosting some of America’s largest and most valuable companies, including Apple, Amazon, Microsoft, and Alphabet, the performance of the index is often used to gauge overall sentiment in the market.
The NASDAQ is now up 11.56% for the year, and 4.02% over the last 12 months. This is a huge recovery for the index, and the performance of some of the largest stocks is helping to drive returns. Even the bargain stocks are performing well, with several small investments experiencing double digit daily price gains this week.
Technology and internet related stocks performanceare the core of this index. Strength suggests that America’s innovative technology industry is still growing. Investor confidence could bring the bulls back to NASDAQ listed stocks.
Stock Performance Turnaround Reinforces the Need for Long Term Portfolio Planning
Dramatic fluctuations in stock performance can be worrying, but recoveries like the one seen in January should be taken as evidence that it’s often the patient investors who come out better off.
For new investors, prices today are still below their 2018 peaks, creating some strong buying opportunities in the most promising sectors.
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