Thursday, December 26, 2019
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Since December 2018, the market has barely looked back
On December 26, 2018, the stock market went nuts.
The S&P 500 and the Dow gained just under 5% on the day after Christmas. The Nasdaq gained nearly 6% as the stock market recovered from its worst-ever Christmas Eve sell-off.
Point gains for the Dow (1,086 points) and the S&P 500 (116 points) were the largest on record.
One week after this post-Christmas rally, Apple told investors that everything they feared to be unfolding — a global economic slowdown resulting from the U.S.-China trade war — would be seen in their current quarter’s results. This news sent stocks tumbling more than 2%.
And thus began a market rally that has hardly had any hiccups since.
Along the way, of course, the stock market’s 2019 story seemed to be imperiled.
The trade war served as a Sword of Damocles hanging over the year’s gains. An inverted yield curve earlier this year acted as a warning that recession loomed. The surge in executive departures this year perhaps sends a signal that corporate leaders see something concerning in the economy investors haven’t yet figured out.
Despite it all, the market continued to grind higher.
On Tuesday, Deutsche Bank’s Torsten Sløk circulated the following chart, showing the global stock market has gained about $17 trillion in value during 2019.
As many commentators have noted, 2019 has been the kind of year in financial markets you don’t easily forget. In the words of Jeffrey Gundlach: “Just throw a dart and you're up 15%, 20%.”
And as with all things in life, financial markets this year often seemed like a mess in the moment: just one surprise — or tweet — after another. When we look back, however, it is a smooth, coherent story.
One of the “greatest, easiest years ever for investors,” Gundlach said.
A year that really began on December 26, 2018.
What to watch today
7:00 a.m. ET: MBA Mortgage Applications, week ended December 20 (-5.0% prior)
8:30 a.m. ET: Initial jobless claims, week ended December 21 (224,000 expected, 234,000 prior); Continuing claims, week ended December 21 (1.722 million prior)