Investment Year in Review for 2019

The year 2019 was a solid one for investors. A year after one of the worst fourth quarters since the Great Recession, stocks rebounded to close 2019 with several major indexes reaching record highs. 

During the year, investors faced a yield curve inversion for the first time since 2007, a slowing economy, and a constant barrage of positive and negative information on the trade war with China. Nevertheless, investors stayed the course for most of the year, pushing stocks to their best year since 2013.

Each of the benchmark indexes listed here closed 2019 in fine fashion, led by the tech stocks of the Nasdaq, which gained more than 35.0%. The large caps of the Dow (22.34%) and the S&P 500 (28.88%) also fared well by year’s end. The small caps of the Russell 2000 began the year on a tear, ending February up almost 17.0%. However, the small-cap benchmark index pulled back some in March, but remained a steady gainer for much of the rest of the year, closing 2019 about 24.0% ahead of where it started. 

U.S. Treasury yields swung dramatically in 2019, ranging from a low of 1.43% to a high of 2.80%. Investors were a bit unnerved in March when a recession indicator — an inverted yield curve — occurred for the first time since 2007. That’s what happened when the yield on U.S. 10-year Treasuries fell below the yield on the 3-month note — a potential sign of an economic slowdown. However, the yield inversion was short-lived. 

Investors saw a steadying economy, modest inflationary pressures, and continued job growth, all of which helped ease investor concerns. Overall, the yield on 10-year Treasuries closed at 1.91%, about 77 basis points below where it began the year, as rising bond prices dragged yields lower (bond yields move in the opposite direction from bond prices).

Economic growth slowed in 2019, but not enough to prompt investors to avoid stocks. Fears of a global economic slowdown continuing into 2020 seem to have abated in the near-term, but fears may reemerge if trade negotiations falter or other geopolitical events steer the economy elsewhere. However, as the negotiations between the United States and China stand now, they bode well for the U.S. and global economies. 

Ultimately, 2019 was an exceedingly positive year for many major markets. 

Market/Index  2018
As of
DJIA 23327.46 26916.83 28538.44 1.74% 6.02% 22.34%
Nasdaq 6635.28 7999.34 8972.60 3.54% 12.17% 35.23%
S&P 500 2506.85 2976.74 3230.78 2.86% 8.53% 28.88%
Russell 2000 1348.56 1523.37 1668.47 2.71% 9.52% 23.72%
10-year Treasuries 2.68% 1.67% 1.91% 14 bps 24 bps -77 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark the performance of specific investments.


Dustin Sobolik - Investment OfficerInvestment Year in Review for 2019

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