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Today’s Markets

HERE ARE the latest numbers from the world of investing:

  • The S&P 500 fell 6.2% in 2018, after gaining 19.4% in 2017. These figures don’t include dividends. Since the market bottomed on March 9, 2009, the shares in the S&P 500 have climbed 271%, though they remain just 64% above their March 24, 2000, peak.
  • While growth stocks were punished severely in 2018’s fourth quarter, they still outpaced value stocks over the entire year, thanks to strong gains in 2018’s first nine months. Meanwhile, both developed foreign markets and emerging markets lost more than 16% in 2018, in part because of a strengthening U.S. dollar, which drove down the price of foreign stocks for U.S. holders.
  • The benchmark 10-year Treasury note finished 2018 at 2.68%, up from 2.41% at year-end 2017. In early July 2016, the 10-year yield hit a record low of 1.37%.
  • Short-term interest rates climbed in 2018, pushing up yields on cash investments like savings accounts, money market funds and short-term certificates of deposit. Matters may not improve in 2019: The Federal Reserve has indicated further rate increases are on hold.
  • Real assets had mixed results. Oil, which finished 2017 at $60, was $14 lower 12 months later. Real estate investment trusts posted modest losses in 2018, similar to those suffered by the broader U.S. stock market. Gold, which ended 2017 at $1,305, fell to $1,285 by the end of 2018.
  • Bitcoin was hammered in 2018, falling to $3,700 from above $14,000 at year-end 2017.
  • In December 2018, the Federal Reserve projected that the U.S. economy will expand 3% in 2018, with unemployment dipping to 3.7% and core inflation running at 1.9%. For 2019, the Fed is forecasting growth of 2.3%, with unemployment dropping even further, to 3.5%. Since the economic contraction of 2008 and 2009, real (after-inflation) gross domestic product has grown fairly steadily. But the pace of growth has been modest, averaging 2.1% a year over the eight years through 2017, including growth of 2.3% in 2017 and 1.5% in 2016.
  • As of 2016, 51.9% of U.S. families were invested in the stock market, up from 48.8% three years earlier, but below the 53.2% peak recorded in 2007, according to the Federal Reserve’s Survey of Consumer Finances. The survey is conducted every three years.
  • Index funds focused on U.S. stocks—both the mutual-fund and the exchange-traded varieties—attracted $1.6 trillion in new money over the past decade, while actively managed funds saw $1.3 trillion in redemptions, reports the Investment Company Institute’s 2018 Fact Book.
  • There’s been much handwringing over whether index funds are coming to dominate the U.S. stock market. But according to the Investment Company Institute, index mutual funds and exchange-traded index funds hold just 13% of U.S. stocks, versus 16% for actively managed funds and 71% for others, including individuals, hedge funds, pension funds and insurers.

Want to get a handle on stock and bond market valuations? Check out the chapter on financial markets.

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