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Bob Carey
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  US Stock Markets Ended December 28th, 2018
Posted Under: Weekly Market Commentary

 
After beginning the week in freefall, equites rose for the week on a dramatic melt up in stocks on Wednesday that saw the Dow Jones Industrial Average gain 1,086 points in one day. Already elevated market volatility was exacerbated by lower than normal market liquidity due to the holiday-shortened week and the partial government shutdown. In addition, Treasury Secretary Steven Mnuchin stirred fears of a liquidity crisis in the financial system by calling all six major banks to check on their status. Although he declared liquidity is fine within the banking system, the announcement unnerved many investors. The S&P 500 Index after dividends is on pace for its first annual loss since 2008 as slowing growth, tariffs and a further tightening from the Federal Reserve remain key headwinds for investors in 2019. While investor uncertainty has increased, consumer spending remains strong as U.S. holiday sales increased by the largest clip in six years. In stock news, many retailers jumped on the back of the strong holiday sales including Macy's Inc. and Kohl's Corp. bouncing over 6%. Amazon.com, Inc. gained over 7% for the week after announcing record breaking holiday shopping numbers. Looking ahead, sentiment will continue to drive short-term returns of the market as the partial government shutdown will continue to make headlines next week. Longer term, fundamentals tend to play a bigger role in market returns. Fourth quarter earnings season will start mid-January, which is expected to see continued strong earnings growth with the S&P 500 anticipated to grow earnings by over 20% for the full year. While investors have pulled tens of billions of dollars from equity mutual funds over the past weeks and months and bearish sentiment is at a five-year high, both tend to be contrarian indicators that might point to a rebound in equities if some of the current clouds over the market lift.
Posted on Monday, December 31, 2018 @ 9:34 AM • Post Link Share: 
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These posts were prepared by First Trust Advisors L. P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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