The volatility and freefall of late-2018 are still fresh on the memory of many an investor. Trade uncertainty and soaring interest rates decimated Stock Market at the end of last year. For some investors, 2018 was a total write-off, although there were still winners to find in almost every sector.
The market is more confident when stocks are doing better across the board. And that’s the situation that we find ourselves in this year. In fact, the 2019 stock market has so far been the best on record for more than three decades. Here’s what’s happening in the market.
Dow Jones Index is Rapidly Climbing
The Dow Jones International Average, one of the most important stock benchmarks, has now recorded a nine-week gains streak that hasn’t been seen in 32 years. Across the benchmark, stocks have gained 11.6% since the start of 2019.
The S&P 500, which tracks the most valuable stocks in America, is also a good indicator of current market performance. Stocks on this index have gained 11.4% since January 1.
The NASDAQ Composite, a tech-heavy index, has done even better. Gains on the NASDAQ since the start of the year are currently tracking at 13.45%. This is an impressive result especially considering that many were predicting a tech industry and chip market crash at the end of last year.
Stock Market Rates and Trade News the Biggest Factors
Federal money rates were a major cause of investor unease last year. The ongoing trade war with China and other partners was also unsettling for equity markets.
This year, the news on both fronts is much more positive.
- Most trade issues with European and North American partners have been resolved. A replacement for the longstanding NAFTA deal has been agreed and is awaiting debate in Congress.
- The United States and China are also deep into trade negotiations, which have just been extended, thanks to what the White House describes as “substantial progress”.
- Rates have also stabilized with the Federal Reserve seemingly realizing that its aggressive rate hikes were harming the economy.
- Fourth quarter earnings reports were also strong, helping to drive confidence in a range of stocks across different industries.
How Long Will It Last?
Many investors will now be asking the question: how long will it last? As with virtually everything in the stock market, there’s no reliable way to predict the future. Current signals indicate strength in stocks as well as consumer confidence. Some factors like trade and rates are favorable for stock growth.
Investors can have confidence knowing that the market is in a better place than it was at the end of last year. As always, due diligence is necessary before making any buy or sell decision for your portfolio.
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