Wall Street Has Long Road Ahead in 2019

Crisis in the stock market

Wall Street had a bit of a roller coaster end to 2018 and the New Year is not having such a great start.  While Monday saw a bit of sunshine in terms of a hopeful turnaround, the markets closed 2018 with the worst showing in ten years.  

The dismal numbers at the end of the year definitely earmark quite a turbulent year. After all, only a few months prior, the indexes saw record highs—through summer and early fall—but those major indexes fell dramatically in October. 

Indeed, the Standard & Poors 500 Index, which is the US market’s main benchmark index—finished the year down a disappointing 6.2 percent. The last time this index performed so poorly was during the 2008 financial crisis.  Sure, the S&P posted a few miniscule losses in both 2011 and 2015, but the market is cyclic so you can expect a few lows here and there.  And in both of those years, the index pushed out small gains once you included dividends.  

In addition, the Dow Jones Industrial Average fell nearly 6 percent and the Nasdaq composite plummeted more than 12 percent.  

But the US is not the only market affected by the downturn.  Major European indexes also closed out 2018 in the red.  France’s CAC finished the year down 11 percent while Britain’s FTSE 100 found itself 12.5 percent down on the year.  Also, Germany’s DAX closed down a shocking 22 percent from the high it had reached in January, and 18 percent down on the year. 

All of this is important, of course, because Wall Street started the year pretty strong.  2018 had the guidance of a growing economy with steady corporate profits. Stocks were climbing—and had reached some new highs—but quickly shook off the gains with steep drops within the first half of the year, but then enjoyed some lift due to tax-cut corporate earnings to hit more all-time highs by September.  Of course, that is when everything fell apart. 

As such, analysts remind that investors have been—and continue to be—worried about the US-China trade relationship.  With the dispute coming to head and higher interest rates on the horizon in the US, coupled with a slowing US housing market and weaker global growth forecasts for 2019, traders are more cautious than ever. 

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