Last year, US equity markets had their worst December since the Great Depression. Nothing seemed to work in the markets’ favor in the fourth quarter. There was a looming global growth slowdown in 2019. The US economy was expected to grow at a much slower pace in 2019 compared to 2018. The US-China trade war had a negative impact on market sentiments. The Fed didn’t help bulls’ cause by raising interest rates four times last year. Fed Chair Jerome Powell took a hawkish stance last year, which didn’t please President Trump.
Fourth quarter sell-off
After the markets fell in the fourth quarter, several fund managers including David Tepper and Jim Paulsen saw a buying opportunity. President Trump, who frequently tweets about the market performance and sees stock market returns as a reflection of his performance, also recommended buying stocks. Speaking with reporters on December 25, President Trump said, “We have companies — the greatest in the world, and they’re doing really well.” He said, “So I think it’s a tremendous opportunity to buy. Really a great opportunity to buy.”
Looking at the markets’ first-quarter performance, the S&P 500 (SPY) rose 13.1%. Among the FAANG pack, Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), and Alphabet (GOOG) rose 27.2%, 18.6%, 21.0%, 33.2%, and 13.3%, respectively. The Chinese stocks that got hammered last year also posted decent returns. Alibaba (BABA), Baidu (BIDU), and JD.com (JD) rose 33.1%, 3.9%, and 44%, respectively, in the first quarter.