Market Perspective for December 30, 2019

Equities opened the week with small losses. The Russell 2000 Index declined 0.30 percent, while the S&P 500 Index slipped 0.58 percent. The S&P 500 Index has gained 28.50 percent for the year through Monday’s close.

The technology sector should finish the year as the best performing major sector. SPDR Technology (XLK) currently has a 49.46 percent gain in 2019. Among the larger sectors (as a percentage of the S&P 500 Index) SPDR Financials (XLF) follows with an increase of 31.49 percent.  SPDR Healthcare (XLV) has risen 20.19 percent. Falling interest rates helped SPDR Utilities (XLU) climb 25.41 percent. The laggard this year is energy. SPDR Energy (XLE) has gained only 11.07 percent.

iShares PHLX Semiconductors (SOXX) has rallied 61.83 percent, iShares Expanded Tech Software (IGV) 33.89 percent and Invesco Nasdaq Internet (PNQI) 28.70 percent on the year.

Low volatility and high-quality dividend shares were strong performers. iShares Edge MSCI Minimum Volatility USA (USMV) has a return of 27.41 percent, Vanguard Dividend Appreciation (VIG) 29.50 percent and WisdomTree U.S. Quality Dividend Growth (DGRW) 29.38 percent.

The U.S. beat most foreign developed and emerging markets in 2019. iShares MSCI EAFE (EFA) and iShares MSCI Emerging Markets (EEM) have gained of 21.52 percent and 17.96 percent. While excellent returns, domestic stocks remain the best bet for investors. The U.S. Dollar Index has risen more than 4 percent.

Bonds performed well thanks to falling interest rates. iShares iBoxx High Yield Corporate Bond (HYG) has increased 13.97 percent heading into the last day of trading. Fidelity Corporate Bond (FCOR) has rallied 15.22 percent and Invesco Senior Loan (BKLN) 9.93 percent.

This week will be holiday shortened again with the New Year’s holiday falling on Wednesday.  This will delay economic data including the employment report that typically comes on the first Friday of a month.

The Conference Board’s consumer confidence survey for December is out on Tuesday. Manufacturing PMIs will be out on Thursday and Friday, along with motor vehicle sales for December. The minutes of the last FOMC meeting will also be released on Friday.

There are no earnings of note this week. Earnings season will kick into high gear mid-month with several major banks reporting.

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