Investment Commentary –January 8th, 2019

Year to Date Market Indices as of Market Close January 8th, 2019
Dow 23,787 (-4.22%)
S&P 2,574 (-4.77%)
NASDAQ 6,897 (-1.73%)
Gold $1,286 (-6.36%)
OIL $4,9376 (-6.69)
Barclay Bond Aggregate (-0.72%)
Fed Funds Rate 2.50% (last increase was 12/19/18)

Stocks close higher for a third straight day as real estate and internet shares lead

Stocks closed higher for a third straight session Tuesday as optimism over U.S.-China trade talks bolstered sentiment and nudged investors toward assets perceived as risky, such as equities.
Gains were led by real estate and internet stocks, while Apple Inc. and other mega-cap tech companies also helped to propel the market higher.

How did the major benchmarks fare?

The Dow Jones Industrial Average DJIA, +1.09% rose 256.10 points, or 1.1%, to 23,787.45, while the S&P 500 index SPX, +0.97% gained 24.72 points, or 1%, to 2,574.41. The Nasdaq Composite Index COMP, +1.08% climbed 73.53 points, or 1.1%, to 6,897.

Real estate and communication services, which groups together Facebook Inc. FB, -0.03% and Alphabet Inc. GOOGL, -0.03% GOOG, +0.74% , were the big winners.

What drove the market?

Face-to-face negotiations between U.S. and Chinese officials entered a second day Tuesday, with hopes rising that the talks will bear fruit after Chinese President Xi Jinping’s top policy aide, Premier Liu He, made an appearance on Monday.

Meanwhile, the world’s biggest smartphone and chip maker cautioned over profits Tuesday, less than a week after Apple Inc.’s own shock warning. Citing “mounting macro uncertainties,” Samsung Electronics Co. 005930, -1.68% warned of a 29% drop in fourth-quarter operating profit, far worse than analysts were expecting.

With a partial government shutdown now in its 17th day, lots of attention was expected to focus on a prime-time border-wall speech from Trump later Tuesday evening. Some government employees will miss their first paycheck this week as a result of an impasse between Trump and Democratic lawmakers over funding for a proposed wall along the U.S. southern border with Mexico, though the IRS announced Monday that it would continue to process income tax refunds during the shutdown, in a reversal of longstanding policy.

You can save more toward retirement in 2019. Here’s how to make the most of it

You can save up to $19,000 in your 401(k) this year, up from $18,500 in 2018. You can also put up to $6,000 in individual retirement accounts, up from $5,500 last year.
If you are 50 or over, you can save even more via catch-up contributions: an extra $6,000 for 401(k) and other employee plans, and $1,000 more in IRAs.

If you’re not even close to those limits, don’t fret. You can still take steps to make sure you’re on track to meet your retirement savings goals.

If you haven’t made retirement savings a priority, now is a great time to start catching up. That’s because retirement plan contribution limits have been pushed higher for 2019.

The IRS has increased the amount employees can sock away in their 401(k) plans in 2019 to $19,000. That’s up from $18,500 in 2018.

That limit also applies to 403(b), Thrift Savings and most 457 plans. The maximum amount you can put away in your individual retirement accounts has also been bumped up for the first time since 2013. In 2019, you will be able to save up to $6,000 in your IRA, up from $5,500 in 2018.

If you are 50 and over and looking to make up for lost time, catch-up contribution limits will remain the same for 2019: For 401(k) and other employee plans, you can put in an additional $6,000 in 2019, and for IRAs, it’s an additional $1,000.

Around the web

Down year: Stocks rose modestly on Monday, the final day of 2018, to cap the first negative year for the S&P 500 Index on a total-return basis since 2008. The index returned –4.4%, including dividends, and it fell 6.2% on a price basis.

Jobs blowout: The U.S. economy generated 312,000 new jobs in December, surpassing economists’ expectations for a gain of around 180,000. In addition, wage growth picked up, and the government revised jobs figures for October and November upward by a total 58,000.

Trade talks on tap: The United States and China on Friday raised hopes of further progress in resolving their trade dispute, announcing plans for a new round of negotiations starting Monday, January 7, in Beijing. The talks will be the first formal negotiations since the countries announced in early December that they had agreed to hold off on further tariff increases for 90 days.

Market Performance since 10 Years Ago
DOW (+175%)
S&P 500: (+183%)
Nasdaq: (+326%)

Other Notable Indices (YTD)
Russell 2000 (small caps) 4.23
EAFE International 1.91
Emerging Markets 0.44
Shiller Annuity Index -1.32

The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.