The last quarter delivered a strong finish to a great year for the stock market. Throughout the year, the market moved on news of the trade dispute with China. Ultimately, progress was made with China and the markets rallied. Stock buybacks also helped the stock market. Many companies used larger profits from the lower tax rate to buy back shares of their company’s stock, which pushed stocks higher.
Large U.S. stocks ended the year up 31.5%, while smaller U.S. stocks gained 25.5%. International stocks also performed very well, although they have underperformed U.S. stocks for two years in a row. International stocks were up 22.6% and emerging market stocks were up 18.9%.
Heading into 2019, it appeared that interest rates would continue to rise. However, signs of economic slowing lead the Federal Reserve to reverse course and cut interest rates three times in 2019. The yield on 10-year Treasury bonds ended the year at 1.92%. The decline in interest rates helped the overall bond market to end the year up 8.72%.
With the stock market at all-time highs, some investors are worried about the next downturn. Investing is not a smooth ride; there are always uncertainties in the stock market. While attempting to time the market successfully does not work, history has shown that successful investors remain invested and diversified.
|Index||4th Quarter 2019||Year-to-date|
|Dow Jones 30||6.67%||25.34%|
|Bloomberg Barclays U.S. Agg Bond||0.18%||8.72%|
|MSCI EAFE Index||8.21%||22.66%|
|MSCI EM Index||11.93%||18.90%|
Sources: Y Charts and J.P. Morgan Asset Management
Figures as of December 31, 2019. Past performance cannot guarantee future results.
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