Private Client Group

January 5th, 2019

The Bull Market Limps into the New Year

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The market kicked off the year with small rises while negotiations around government shutdown continue to drag along with no clear end in sight and Apple made a surprising announcement. How could these events impact the market? Read on to get the details.

The Bull Sputters into the New Year – The S&P 500 limped into the new year, with a modest +0.13% rise on the first day of trading on January 2nd. Based on volatile equity market action in Asia on the previous day, however, the S&P 500’s small rise may be viewed as a minor victory. Fears about a slowdown in China continue to weigh on global markets and the pile-on of a government shutdown and a flattening yield curve in the U.S. have investors on edge. A staggering $75.5 billion was pulled from U.S. equity mutual funds and ETFs in December, which marks the largest monthly exodus since at least 1992.1

Few Signs of Breakthrough in Government Shutdown Talks – Leaders from both parties met in the White House this week as negotiations for funding the U.S. government drag along. President Trump has doubled down on his demand for border wall funding to the tune of $5 billion, but House Democrats – who take control of the House on January 3rd – have indicated that no funding for the wall will be a part of the final budget deal. House Democrats plan to submit multiple spending packages in the coming days, but Republican leaders in the Senate have indicated they will not even take a vote on a bill that does not have White House support. The end result: a government shutdown that does not have a clear end in sight.2

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Know where you stand in terms of your long-term investment goals!

While you cannot predict exactly how these stories will pan out or how they could affect the market, you can try to prepare for what’s to come in 2019. As you kick off the New Year, knowing your net worth is a great place to start planning. It is critical to your financial well-being and can help you prepare for what’s ahead.

If you have $500,000 or more to invest and want to understand how to measure your net worth, download our guide Measuring Your Net Worth.3 Simply click on the link below to get your copy today!

Download Zacks Guide, Measuring Your Net Worth

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The Elephant on the Trading Floor — The week of January 7th could be a meaningful one in defining future trade relations between the United States and China. The U.S. trade delegation led by China hawk Robert Lighthizer is set to arrive in Beijing for the week of January 7th to press for a resolution to the trade dispute. China has so far offered some concessions in the form of pledges to cut tariffs, ease restrictions on foreign companies operating in China, and buy more U.S. goods such as soybeans, but Lighthizer is largely skeptical of Chinese promises on trade given their historical tendencies to over-promise and under-deliver. So far, China has made these promises but offered scant detail about actual implementation, which the U.S. trade delegation is expected to push for next week. President Trump tweeted that “big progress” was being made already, but many market observers viewed this as an attempt to calm markets.4

Apple, Inc.’s Surprising Announcement – in a rare move for Apple, CEO Tim Cook sent a letter to investors revising downward the company’s quarterly earnings and revenue forecast for the upcoming quarter, changing numbers that were released to the public only days before on December 29th. The downward revision marks the first time in 15 years that the company has had to cut forecasts, and was prompted by a recalibrated impact of waning sales in China. The revision brought fresh concerns about the extent of China’s economic slowdown, but also raised fresh questions about Apple’s future in the world’s largest smartphone market. China represents nearly 20% of Apple’s total revenue, and Cook indicated that 100% of the estimated shortfall in quarterly revenue comes from the China impact. Even with the downward revision, however, it should be noted that Apple’s fundamentals are the envy of just about every company in the world:5

While we may not know how all these stories will pan out in 2019, or how they could affect the market in the long-term, knowing your net worth can be critical to your financial well-being and can help you prepare for the New Year.

Calculating your net worth may give you a better idea of where you stand in terms of your long-term investment goals. If you do not currently know your net worth, then now may be a great time to calculate it.

If you have $500,000 or more to invest and want to understand how to measure your net worth, download our guide Measuring Your Net Worth.6 Simply click on the link below to get your copy today!

Disclosure

1 The Wall Street Journal, January 2, 2019. https://www.wsj.com/articles/the-battered-bull-market-is-limping-into-2019-11546425000?mod=hp_lead_pos4
2 The Wall Street Journal, January 2, 2019. https://www.wsj.com/articles/shutdown-shapes-up-as-day-one-test-for-new-congress-11546425000?mod=hp_lead_pos3
3 ZIM may amend or rescind the “Measuring Your Net Worth” guide for any reason and at ZIM’s discretion.
4 The Wall Street Journal, December 31, 2018. https://www.wsj.com/articles/u-s-presses-china-on-trade-proposals-11546208150?mod=djem10point
5 Newsroom, January 2, 2019. https://www.apple.com/newsroom/2019/01/letter-from-tim-cook-to-apple-investors/?mod=article_inline
6 ZIM may amend or rescind the “Measuring Your Net Worth” guide for any reason and at ZIM’s discretion.

DISCLOSURE

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts as an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.

This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole.

Any projections, targets, or estimates in this report are forward looking statements and are based on the firm’s research, analysis, and assumptions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.

Certain economic and market information contained herein has been obtained from published sources prepared by other parties. Zacks Investment Management does not assume any responsibility for the accuracy or completeness of such information. Further, no third party has assumed responsibility for independently verifying the information contained herein and accordingly no such persons make any representations with respect to the accuracy, completeness or reasonableness of the information provided herein. Unless otherwise indicated, market analysis and conclusions are based upon opinions or assumptions that Zacks Investment Management considers to be reasonable.

Any investment inherently involves a high degree of risk, beyond any specific risks discussed herein.

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