The 4th quarter 2018 saw a steep decline in stock prices, some areas of the market were down more than 20%. This selloff brought stock valuations down to more attractive levels. As a result, buyers stepped in and stopped the decline after reaching market lows on Christmas Eve. January started out with a nice bounce, the *S&P 500 Index was up 6.4% and the Nasdaq Composite Index was up 7.5% through January 28th.
On the economic front, signals are mixed, while the U.S. GDP is expected to grow at a modest 2% in 2019, global trade is still a big concern. The ongoing trade talks and economy in China continue to be headwinds for stocks.
On the bright side, after 35 days the partial government shutdown is over, at least until February 15th. Corporate earnings season is in full swing with many companies reporting or expected to report positive fourth quarter results.
With all that said, where do we go from here? Will the market be up tomorrow, next week, next month? The short answer is who knows, and if you come across anyone who thinks they do, turn and run. No one has ever predicted with any consistency short term moves in the market. What we can tell you with a very high degree of certainty is this, if your investment style is long-term growth, you should maintain a healthy allocation to U.S. equities. However, if you’re not sure what your investment style is, you should come speak with us.
Securities offered through Cantella & Co., Inc., Member FINRA/SIPC.
* S&P 500 and Nasdaq Composite returns calculated using data from Yahoo Finance