Markets, Economy

Weekly Kickstart (01/07/2019-01/11/2019)

1/7/19 8:00 AM

iStock-626627280.jpgIt was a strong start to 2019 for the stock market, as the S&P 500 last week lifted by 1.86 percent to 2,531.94. That is a welcome follow-through on the prior week’s gain, and especially encouraging given the disappointing finish to 2018. Indeed, the benchmark index fell 6.24 percent during the past twelve months, the first down year since 2015 and the largest decline since the 38.49 percent plunge in 2008. Most of the damage was done in Q4, when the broad index experienced its biggest quarterly drawdown (-13.97 percent) since Q3 2011. December in particular was quite disappointing, as the historically strong period for equities instead saw the S&P 500 lose 9.18 percent, the largest 1-month drop since February 2009.

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2018 was also not the best year for 401(k) participants, according to updated EBRI data, but consistent contributions clearly helped lessen the impact of volatile markets. For example, the average account balance for older (age 55-64) workers with at least 20 years of tenure slipped by just 0.3 percent in 2018, and younger (25-34), less-tenured (1-4 years) workers still managed to end the year with 18.8 percent more in their accounts than they started with. Performance over longer time horizons is even more impressive because 401(k) plans work best when decades of persistent, tax-advantaged savings are combined with the demonstrated resiliency of the stock market. Additional assistance in amassing a large retirement nest egg is available through the use of dollar-cost averaging and regularly consulting with a professional financial advisor. As always, we are here to help with any questions you may have.

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To recap a few of the things we learned about the economy last (holiday-shortened) week, the positives included that the 30-year mortgage rate slid to a 4-month low, corporate layoff announcements declined, small business hiring surged, nonfarm payrolls jumped, labor force participation rose, and Americans’ wages grew at a faster rate. As for the negatives, mortgage applications fell, manufacturing activity continued to cool, the unemployment rate ticked higher, and initial jobless claims increased (albeit due primarily to furloughed government workers). This week the pace of economic data picks up slightly, with a few important reports on the services sector, employment, small business, and inflation scheduled to be released, along with the potentially market-moving minutes from the last Federal Open Market Committee meeting due out on Wednesday.

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**A more detailed snapshot of the U.S. economy can be found here.**

What To Watch:

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Thursday

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Sources: Econoday, EBRI, Twitter, Bloomberg, FRBSL

Post author: Charles Couch

Disclosures