Stormy December – Monday Morning Market Memo – December 31, 2018

Good morning,

The stock market is coming off a holiday-shortened week characterized by erratic and notable price swings. The week started with the worst Christmas Eve decline ever, as the Standard & Poor’s 500 Index and the Dow Jones Industrial Average fell 2.7% and 2.9% respectively – until then the S&P 500 had never declined more than 1% on the last trading day before Christmas (according to Bespoke Investment Group). When markets reopened Wednesday, after the Christmas holiday, the Dow Jones Industrial Average closed over 1,000 points higher, registering its biggest one-day point gain ever. On Thursday, after dropping over 600 points intraday, the Dow ended with a gain of over 260 points. When the trading week came to an end and the roller-coaster ride had to close, the indices ended with their first weekly gain in an otherwise stormy December.

The Dow Jones Industrial Average rose 2.8%, the NASDAQ Composite gained 4%, and the Standard & Poor’s 500 Index climbed 2.9%. Despite the weekly gains, the Dow and S&P are on track for their worst December since the Great Depression (according to Dow Jones Market Data). Month-to-date the Dow is down 9.7%, the NASDAQ is 10.2% lower, and the S&P is down 9.9%. Market volatility is stemming from things including Federal Reserve rate increases, trade issues, nervousness about the health of the global economy, computer trading in a lightly populated holiday week, and portfolio rebalancing. While these things won’t last forever, it is unknown how long it will take some of the central issues to play out, so don’t be surprised if we continue to see more volatility going forward.

Looking to the week ahead the stock market is open during normal trading hours today, and closed tomorrow in Observance of New Year’s Day. The calendar is light is on economic data and some data releases could be delayed because of the government shutdown. The December Jobs Report however, will likely be released on time this Friday. Market expectations are for a gain of about 180,000 jobs and for the unemployment rate to hold steady at 3.7%. So despite the stormy market and headline news, the employment situation is expected to remain on solid footing.

Happy New Year & we wish you health, happiness, and prosperity in 2019!

All the best,
Southport Station Financial Management, LLC