With just six trading days left in 2019, equities don’t seem to be able to stop going higher. The Dow Jones Industrials finished the week up over 319 points, or 1.1%, at a record high of 28,455. Meanwhile, the S&P 500 gained 1.7% to 3,221, and the Nasdaq Composite outpaced the other averages for a gain of 2.2%, thanks to a strong showing in technology stocks. All market sectors were in positive territory lead by – oddly enough – utilities with a nearly 3% pop. Energy, health care and technology names were also strong performers. Small and mid-cap stocks were solidly in the green, while gold and crude oil prices remained steady. If you remember last December, the major indexes couldn’t seem to stop falling on recession fears. The S&P 500 had dropped 12% through Dec. 21 and was on the way to its worst December since 1931. Now, the Dow has climbed 22% so far this year, while the S&P 500 has added 28.5% and the Nasdaq has surged 34.5%. The S&P 500 and Nasdaq are on their way to their best years since 2013.
As for the economy, traders received a few encouraging economic reports on Friday:
- According to the final estimate, the nation’s GDP expanded at a rate of 2.1% during the third quarter, which was in keeping with the consensus forecast.
- Elsewhere, personal incomes rose 0.5% in the month of November, with a healthy increase in spending, as well.
- Finally, the University of Michigan’s consumer sentiment survey was finalized at 99.3 for the month of December, which was a solid showing.
As for next year’s monetary policy, I expect the Federal Reserve to follow a steady interest-rate course, which would keep borrowing costs at historically low levels. However, fiscal policy uncertainty (especially considering the politically charged backdrop in Washington and a presidential election) should persist. And hopefully we will see a possible resolution to the drawn-out trade war with China next year. In sum, I believe that 2020 should be approached as a year in which stocks are chosen with an eye towards quality, earnings predictability and a well-defined dividend policy.
Trading on the major equity exchanges ends early, at 1 PM on Tuesday for Christmas Eve. The bond market closes at 2 p.m. All U.S. markets will be closed Wednesday for Christmas.
Today’s Trivia Question: Twenty-First Century Fox, Inc. (20th Century Fox Studios and film library, Fox Animation, Fox Entertainment Cable Television, et. al) sold a major portion of its business to what company in March 2019? Comcast, The Walt Disney Co., ViacomCBS or Netflix.