Stock Market: US stocks on track for best year since 2013


Although this year’s final trading day is
still underway, it’s safe to say that US stocks had a tremendous year, within touching distance
of being the best year in more than two decades. The major reason behind the success was that
the US Federal Reserve reversed course and lowered interest rates and negative rates
abroad kept even more money flowing into the US. Let’s delve a little deep into the overall
performance of three major indices in the outgoing year. All the three benchmarks climbed by over 20%
for the year, but the Nasdaq Composite rallied the most, on track for a 36% gain this year,
which would also be its best performance since 2013. The tech-heavy index recorded its longest
winning streak since July 2009 last week and climbed above 9,000 points for the first time. The prospect of a truce in the US-China trade
war and the probable resolution of Britain’s Brexit crisis have helped boost optimism in
recent weeks. The other key driver was the Fed’s recent
decision to pump $500 billion into the repo market which added more fuel to the market
rally and was a kind of backdoor stimulus. The S&P 500 has also been strong over the
course of the year, posting a 29% annualized gain, on pace for its best performance since
2013. Among the S&P 500 components, only 57 have
had negative returns. The Dow, meanwhile, climbed by 22%, its best
performance in two years. In a bright spot among US stocks, Apple has
gained the whopping 84% this year. Let’s examine its stock action in 2019. The year started off dismal for Apple stock,
when it plunged by 10% on January. The company cut its sales forecast at the
time. The stock was down by as much as 39% from
its all-time high. For the next seven months, Apple recovered
from those lows to now trade at $291.52 per share. Apple would have provided a nice gain if you
bought it right. Speaking of the year’s losers, Gap, Macy’s,
and Kohl’s were all among the worst performers in 2019. The Gap Inc. is now rated as Underweight. Its price target stands at $14.The stock has
a high of $31.39 for the year while the low is $15.11. It lost 30.82% on a yearly basis. Gap reported a 2% decline in revenue and a
double-digit decline in EBITDA. Profit margins slid, so the free fall was
alarming. Overall, the scenario for 2020 will be for
stocks to rise higher as markets firmly believe the Fed will be on hold, credit markets are
healthy, the consumer is strong and some of the key headwinds in 2019 are becoming tailwinds.

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