2019’s impressive stock market performance has continued in the days after the Christmas Holiday, with the NASDAQ index closing at 9000 points for the first time in its history. The index, which is heavily tech weighted, has now grown 35.98% in the year to date.
Here’s how the indexes performed on Thursday, along with some potential risks for the year ahead.
Strong Performance Across all Major Stock Indexes
The NASDAQ wasn’t the only major index to post strong growth when the markets closed on Thursday.
- The S&P 500 Index (SPX) was up 0.51%, taking it to 29.94% growth for the year to date.
- The Dow Jones Industrial Average (DJIA) was up 0.37%, taking it to 22.69% growth for the year to date.
Performance across these indexes is good news for investors. It shows that there’s still a lot of confidence in the market, which is likely to continue into the new year. The days between Christmas Day and New Year’s Day had the potential to bring some volatility. Instead, trading volume has been high and the bulls are still active.
How Long Will the Bull Run Continue?
There’s no way to accurately predict the future of the stock market, but we can at least take a look at some key signals to see how much confidence could be carried into 2020.
- Unemployment is at a record low. This creates confidence surrounding consumer spending, a key driver in Gross Domestic Product (GDP).
- Corporate earnings have been better than expected in 2019.
- International markets, particularly in Asia, have also been strong. This suggests that global financial confidence is high.
- Trade tensions have eased significantly in recent weeks. The U.S. and China agreed on the terms for a Phase One trade deal, and a replacement NAFTA agreement is making progress.
- S. interest rates are low, thanks to a conservative Federal Reserve policy.
Market confidence is expected to continue into the first quarter. Earnings season will give investors a chance to reevaluate their portfolios.
Is Trade Still a Risk?
Although trade tensions have eased, risk does exist. China and the U.S. still need to agree on a long term solution that will reduce the trade deficit. The Phase One deal is a step in the right direction, but it’s not a complete solution.
Any negative news surrounding trade will have the potential to derail recent growth.
Investors will see 2019 end on a high. As with every year, portfolios should be carefully managed, and investors will need to track company earnings, projections, and the news cycle to make informed decisions in 2020.
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