We started 2019 with fears of an escalating trade war. However, with the ups and downs of the trade talks and recession fears, broader markets played out extremely well. The Dow Jones and the S&P 500 indexes are sitting at record highs as we approach the end of the 11th year of the bull run. We’ll look at the top gains and losses this year. We’ll see what worked and what didn’t work for the Dow Jones.
Dow Jones’ top gains
Apple (AAPL) kept the throne with a gain of almost 85% this year. The company is the third biggest component of the Dow Jones Index. Notably, Apple forms 6.7% of the index. The main reason behind the stock’s rally was better-than-expected iPhone 11 and Airpod sales this year. Phase one of the trade deal with China, one of Apple’s most important markets, also helped investors. Recently, brokerages were positive on Apple stock. Cowen increased its target price from $290 to $325, while Piper Jaffray raised its target price to $305 from $290 last week.
Microsoft (MSFT) is second with a gain of approximately 58% this year. The company’s revenues and earnings beat analysts’ expectations in the last few quarters. Microsoft stock forms almost 4% of the Dow Jones Index (DIA). Currently, the stock is trading at all-time highs. Visa and JPMorgan Chase are some of the other top gainers. They have risen approximately 42% each YTD.
US-China trade talks
The Santa Claus rally boosted the markets. The Dow Jones Index gained in nine of the last 11 trading sessions. So far, the index has risen almost 25% this year. Meanwhile, the S&P 500 has risen more than 30% during the same period.
Investors shrugged off President Trump’s impeachment and focused on favorable developments in the US-China trade truce. After multiple rounds of negotiations, China and the US seem to be on a constructive footing for a partial trade deal. For more than 18 months, corporate investments took a hit due to trade conflicts. However, the trade truce could put aside the clouding sentiment and reinstate capital expenditures.
Dow Jones’ top losses
Walgreens Boots Alliance (WBA) tops the list of the Dow Jones Index’s top losses. The company has lost almost 14% in 2019. The company warned about earnings headwinds in October, which impacted its stock. Among other losses, Pfizer (PFE) lost 10%, while 3M lost more than 7% this year. Collectively, these underperformers form approximately 6% in the Dow Jones Index.
3M stock trended lower throughout the year. The company’s huge first-quarter earnings miss and slashed guidance for the whole year concerned investors. Trade war tensions also dented the stock due to 3M’s large exposure to China. However, 3M stock has seen a recovery lately due to the expected trade truce.
Amid all of the trade war tension and increasing recession fears, the markets managed to stay strong. However, the trade concerns aren’t completely over yet. Although phase one of the deal is supposed to get signed next month, a full resolution seems far away. Also, markets will likely be volatile due to the election next year. We’ll have to see how high the markets go from their record levels.