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December 2019 Monthly Market Report

Monthly Market Report

December 2019

U.S. Markets

Riding a wave of trade optimism and solid economic data, stocks notched solid gains in December, capping off an exceptional year for the equity markets.

The Dow Jones Industrial Average rose 1.74 percent, while the Standard & Poor’s 500 Index advanced 2.86 percent. The NASDAQ Composite led, climbing 3.54 percent.1

The month got off to a rocky start as trade sentiment turned negative. First, President Trump said that he was considering steel tariffs on Argentina and Brazil. Then, on the following day, he floated the idea that a trade deal with China might not happen until after the 2020 elections.

Solid Economic, Trade News

But a solid jobs report encouraged investors, sending stocks higher and wiping out much of the losses suffered in opening days of trading.

When news reports indicated that a phase-one trade deal with China may be near, stocks set another historical high. The apparent trade truce came as a relief to investors, erasing fears that another round of tariffs would kick in on December 15th.

News-Driven Rally

The stock market continued to march higher, following confirmation by officials from both the U.S. and China that a phase-one trade deal had been reached. Investors were also encouraged by positive news that showed strong consumer spending and a recovering housing market.

The final days of trading saw some selling, but not enough to diminish the shine on a powerful month and an exceptional year for investors.

Sector Scorecard

All but two industry sectors ended higher in December. Strong gains were posted in Communication Services (+1.85 percent), Consumer Discretionary (+2.28 percent), Consumer Staples (+1.48 percent), Energy (+1.38 percent), Financials (+1.76 percent), Health Care (+2.18 percent), Materials (+1.55 percent), Technology (+3.65 percent), and Utilities (+2.09 percent). Industrials (-0.63 percent) and Real Estate (-0.65 percent) were marginally lower.2

What Investors May Be Talking About in January

In the coming weeks, many companies will be releasing updates on business activity during the fourth quarter.

Corporate earnings were generally tepid in 2019, so expect attention to focus on whether companies believe they have turned the corner.

A pickup in earnings growth may lift investor sentiment as the new year gets underway. But a more modest forecast outlook may keep some on the sidelines, awaiting a clearer outlook from companies.

World Markets

Favorable developments in the U.S.-China trade dispute provided a boost to overseas markets. The MSCI-EAFE Index gained 3.12 percent during the final month of the year.3

European stocks were higher with gains in all major markets. The United Kingdom led, picking up 2.52 percent. France rose 1.23 percent, and Germany added 0.10 percent.4

Hong Kong posted a powerful month, picking up 7 percent. Meanwhile, Australian stocks slipped, with the ASX 200 down -2.36 percent. The volatile Argentinian market jumped 20.79 percent.5

Indicators

Gross Domestic Product

The final read of economic growth in the third quarter was unchanged, at a 2.1 percent annualized rate.6

Employment

Hiring surged in November, as employers added 266,000 jobs, which was well above the consensus estimate of 187,000. The unemployment rate fell to 3.5 percent, while wages rose a healthy 3.1 percent.7

Retail Sales

Retail sales disappointed, rising just 0.2 percent in November. The number was well below the consensus forecast of a 0.5-percent increase.8

Industrial Production

Industrial production rose 1.1 percent, a rebound largely due to the end of a labor strike at General Motors.9

Housing

Housing starts jumped 3.2 percent in November, with single-family housing starts reaching their highest level in ten months.10 Existing home sales were 2.7 percent higher than the previous month, with tight inventory driving a 5.4-percent jump to $271,300, in the year-over-year median sales price.11 New home sales rose 1.3 percent in November. The three months ending in November were the best three-month period for new home purchases since 2007.12

Consumer Price Index

The cost of consumer goods rose 0.3 percent in November. Year-over-year, inflation is up by 2.1 percent.13

Durable Goods Orders

Orders for long-lasting goods suffered a disappointing decline of 2.0 percent, falling short of the consensus estimate of a 1.2-percent increase.14

The Fed

The Fed reaffirmed its policy stance of maintaining short-term interest rates at their current level. In its statement, which accompanied the end of December’s Federal Open Market Committee meeting, officials suggested that the Fed had a “lower bar for cutting rates and a higher one for raising them.”15

By The Numbers

College and You

University of Central Florida,
63,016 students16

Largest collegiate student body

Harvey Mudd College,
$72,47818

Most expensive college in America

VanderCook College of Music,
107 students17

Smallest collegiate student body

Indian River State College,
$1,06419

Least expensive college in America

$1.5 trillion20

The total student debt in America, including non-U.S. citizens


44.7 million21

Number of U.S. citizens with student loan debt

890,51623

Public Service Loan Forgiveness cumulative borrowers

11.4% (90+ days past due)22

Student Loan Delinquency or Default Rate

20624

Borrowers who have received student loan forgiveness

Master’s Degrees,
38% of the total student debt29

Level of degree with the most debt

California, Texas, New York25

States with the highest average debt

37%27

Percentage of high school graduates who did not complete the FAFSA

Utah, New Mexico, Nevada26

State with the lowest average debt

$2.6 billion28

Total amount left on the table by not completing the FAFSA

Master’s Degrees30

Level of degree least likely to default on loans

 

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.

Investing involves risks, and investment decisions should be based on your own goals, time horizon and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

Any companies mentioned are for illustrative purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance.

The forecasts or forward-looking statements are based on assumptions, may not materialize and are subject to revision without notice.

The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. The S&P 500 Composite index is an unmanaged group of securities considered to be representative of the stock market in general. The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies. The Russell 1000 Index is an index that measures the performance of the highest-ranking 1,000 stocks in the Russell 3000 Index, which is comprised of 3,000 of the largest U.S. stocks. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index. The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost.

International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Please consult your financial advisor for additional information.

Copyright 2020 FMG Suite.

1. The Wall Street Journal, December 31, 2019

2. Factset Research, December 31, 2019

3. MSCI.com, December 31, 2019

4. MSCI.com, December 31, 2019

5. MSCI.com, December 31, 2019

6. CNBC.com, December 20, 2019

7. CNBC.com, December 6, 2019

8. The Wall Street Journal, December 13, 2019

9. CNBC.com, December 17, 2019

10. CNBC.com, December 17, 2019

11. The Wall Street Journal, December 19, 2019

12. Bloomberg.com, December 23, 2019

13. The Wall Street Journal, December 11, 2019

14. The Wall Street Journal, December 23, 2019

15. The Wall Street Journal, December 11, 2019

16. USNews.com, October 1, 2019

17. PrepScholar.com, October 27, 2019

18. BestLife.com, February 22, 2019

19. Niche.com, December 2019

20. BusinessInsider.com, October 11, 2019

21. BusinessInsider.com, October 11, 2019

22. BusinessInsider.com, October 11, 2019

23. Forbes.com, February 2, 2019. The Public Service Loan Forgiveness program is open to people employed by a U.S. federal, state, local, or tribal government or a not-for-profit organization.

24. Forbes.com, February 2, 2019

25. Forbes.com, February 2, 2019

26. Forbes.com, February 2, 2019

27. NerdWallet.com, December 19, 2019

28. NerdWallet.com, December 19, 2019

29. StudentDebtRelief.us, October 21, 2019

30. AmericanProgress.Org, June 12, 2019