Lots of Winners in 2019

Market Blog
December 26, 2019

It was hard not to stumble into a winner if you owned stocks in 2019. With just four trading days left in the year, the S&P 500 Index has returned over 31%, its best yearly return since 2013. Whether you owned diversified stock portfolios of growth or value stocks, small or large cap stocks, domestic or international stocks, the chances are good that you ended up with returns of more than 25% from your stock portfolios.

“This year has been truly rewarding for investors with primary risk assets (stocks) and risk-reducing diversifiers (bonds) performing well,” said LPL Chief Investment Strategist John Lynch. “This year’s stock and bond market gains more than made up for a lackluster 2018 when all major asset classes suffered losses.”

Here are some of this year’s winners and losers:

U.S. stocks: The S&P 500’s 2019 gain topped developed international and emerging markets, as the MSCI EAFE Index and MSCI Emerging Markets Index returned 22.1% and 18%, respectively. We would attribute U.S. stock market leadership to superior economic growth, a strong U.S. dollar, and a surging technology sector.

Large cap stocks: Large and midcap stocks performed better than small caps in 2019 based on the Russell indexes. Better profit growth underpinned large cap strength as the large cap Russell 2000 Index saw profits decline this year compared with a slight profit gain for S&P 500 companies (source: FactSet).The market’s preference was clear as large caps bested small in 10 of the 11 S&P GICS sectors.

Growth stocks: Growth dominated value this year, as the Russell 1000 Growth Index outpaced its value counterpart 9 out of 11 months, and continues to hold a December lead. As with large caps, the market’s preference was clear with value stocks beating growth stocks within only one of the 11 S&P sectors. Technology’s strength powered growth leadership, while value was weighed down by energy weakness.

Technology stocks: Technology led all S&P sectors in 2019 with a nearly 50% total return, well ahead of communication services, the next best sector with a 32.9% return. Technology’s gains were led by the hardware group and Apple’s 80% gain, although strength was broad-based with S&P subindustry gains of 52% for semiconductors and 47% for software. Financials’ slight outperformance lifted value and provided a slight offset.

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Look for more recapping of 2019 in Friday’s Research blog and our next Weekly Market Commentary on December 30.

IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

This Research material was prepared by LPL Financial, LLC.

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