2019 was a difficult year to forecast after 2018 ended with the worst December since the Great Depression. While our positive stock market outlook proved too conservative, we are pleased to report we got more right than wrong for 2019. Here we recap our 2019 predictions and highlight some hits and misses. 

Tough Test

In December 2018, the stock market threw a tantrum that came perilously close to ending the bull market, based on the most widely used definition: a 20% decline on S&P 500 Index closing prices. Stocks fell on a combination of global growth fears, trade uncertainty, and concerns that the Federal Reserve

U.S. stocks rose again this week, with the S&P 500 Index gaining for the fifth straight week, setting more record highs. The Nasdaq Composite and the Dow Jones Industrial Average (Dow) joined the party, also breaking to new highs this week. All major large cap domestic indexes finished the week strongly amid reports that trade talks are progressing toward a January signing of the “phase one” trade pact between the United States and China. The S&P 500 has now gained almost 32% in 2019, and the Dow has risen 26% this year on a total return basis. 

Economic data was sparse during the holiday-shortened week.

2019 was the year of the U.S. consumer.

When the year started, trade tensions were heating up and recession calls had grown louder. Many investors saw the end of the business cycle coming as the expansion was on the cusp of becoming the longest on record.

Then, the consumer showed up in a powerful way. As shown in the LPL Chart of the Day, consumer spending propelled output growth in 2019, while other sectors of the economy floundered. Gross domestic product (GDP) increased 2.4% on average in the first three quarters of the year, and the economy is poised for its third consecutive year of 2% growth.

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. “