Arthur J. Villasanta – Fourth Estate Contributor
New York, NY, United States (4E) – 2019 will likely be a bear market year. It might also be the year of the next Great Recession.
U.S. equity markets are facing the first quarter of 2019 with dread as they foresee a continuation, or even a worsening, of the bloodbath that gripped Wall Street in the last three months of 2018.
Without doubt, U.S. stocks suffered their worst year since the 2008 Great Recession in 2018.
Wall Street ended a depressing and extremely volatile year for stocks with the worst showing in a decade. After recording eye-popping records through the late summer and early fall, major U.S. indices plummeted after early October, leaving them all in the red for 2018.
The benchmark S&P 500 index finished 2018 with a loss of 6.2 percent. The last time the S&P fell for the year was in 2008 during the Great Recession. The Dow Jones Industrial Average dropped 5.6 percent while the NASDAQ Composite fell 12.2 percent.
Major indices in Europe also ended 2018 on the wrong side of the ledger. France’s CAC 40 finished the year down 11 percent. Britain’s FTSE 100 gave-up 12.5 percent. Germany’s DAX wound-up in a bear market. It fell 22 percent from a high in January and 18 percent from the start of the year.
2018 was a topsy-turvy year, notable for its dizzying highs and depressing lows. Wall Street started 2018 strong, riding on the strength of a growing economy and corporate profits. Stocks climbed to new highs and saw corporate earnings grow to another all-time high in September. Then the roof caved-in.
Investors grew worried that Trump’s trade war and higher interest rates would slow the economy, hurting corporate profits. The U.S. housing market began to slow and forecasts of weaker global growth in 2019 fanned investor jitters. And then came October.
Wall Street’s autumn of regret hurled the S&P 500 into a correction for the second time in nine months. That was a sharp drop of 10 percent from its all-time high. A hefty plunge on Dec. 24 sank it briefly into bear market territory, or a drop of 20 percent from its peak. The S&P 500 ended the year just short of the threshold that would have meant the end of the market’s nearly 10-year bull market run.
“For markets to move higher next year, we’re going to have to resolve those issues,” said Jeff Kravetz, regional investment strategist at U.S. Bank Wealth Management.
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