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- The S&P 500 soared 29% this year, marking its best performance since 2013.
- The Nasdaq Composite and Dow Jones Industrial Average also posted healthy gains, rising 35% and 22%, respectively.
- Markets were boosted by Federal Reserve rate cuts, robust economic data, the phase-one US-China trade deal, a thriving tech sector, and increased Brexit certainty.
- Even safe-haven assets jumped in 2019, with gold leaping 19% in its best yearly performance since 2010.
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The S&P 500 tore 28% higher this year, marking its best performance since 2013.
The Nasdaq Composite and Dow Jones industrial average also posted healthy returns in 2019. The tech-heavy Nasdaq jumped 35% to notch its best gain since 2013. The 30-stock Dow index soared 22%, its strongest yearly performance since 2017.
All three major indexes leapt to record highs multiple times in December, pushed higher by news of a finalized phase-one trade deal between the US and China. President Donald Trump announced Tuesday morning that a finalized agreement would be signed at the White House on January 15, marking the first major deescalation of the global trade conflict since it began in summer 2018.
The S&P 500's run-up was primarily fueled throughout 2019 by surging tech stocks. The index's information technology group saw its best yearly gain since 2009 as Apple and semiconductor firms soared over the 12-month period. The expansion of 5G networks through the new year may drive the firms even higher, analysts postulated in year-end notes.
The positive returns weren't exclusive to the index's tech stocks. About 90% of S&P 500 members were up in the year ending Tuesday, partially due to the cheap prices seen at the start of 2019. Stocks tumbled through December 2018, leading the index to close the year with a 6% loss. It took until June 2019 for the S&P 500 to negate the holiday-season plunge.
High stock prices were supported by the trio of Federal Reserve rate cuts seen in the second half of 2019. The Fed slashed its benchmark interest rate to spur spending amid global economic uncertainty. Other central banks around the world implemented similar policies, looking to boost their economies as the US-China trade war, Brexit, and recession fears weighed on consumer sentiment.
The rate cuts also staved off fears that were highlighted by the summer's prolonged yield-curve inversion. The warning sign has preceded every recession since 1950, and fueled concern that the bull market was on its last legs. The rate cuts helped pull Treasury yields back into their typical trading window, and recession worries faded as third- and fourth-quarter data releases showed robust consumer activity and hiring trends.
Easing uncertainties also boosted markets through the end of the year. The UK's general election yielded a new Conservative majority, offering new clarity around the future of Brexit. The phase-one trade deal halted further escalation in the feud between the US and China, and improving economic data in the world's biggest economies suggest expansion could push forward into the new decade.
Elsewhere around the world
The global bull run saw the Stoxx Europe 600 jump 23% during the year. China's Shanghai Composite rose 22%, and Japan's Nikkei 225 gained 18%.
Commodities and safe-haven assets also gained value through the year. Gold posted its biggest jump since 2010 after soaring 19%. Oil finished up 35%, marking its best performance since 2016.
Some fear the stock market performed too well in 2019, and could tumble before continuing its ascent. Stocks are gaining "faster than I would have expected," economist Ed Yardeni told CNBC on December 27, noting that the S&P 500 is nearing his 2020 target before the new year even begins.
"I'm concerned about a possible melt-up here," Yardeni said. "[A] 10% to 20% [correction] would be quite possible if this market gets to 3,500 well ahead of my schedule."
The S&P 500 closed at 3,230.78 on Tuesday. The Nasdaq Composite and Dow closed at 8,972.60 and 28,538.44, respectively. All three indexes closed just below their all-time highs.
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