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Weekly economic review & outlook Strong end to 2019 for equity markets

January 06, 2020

You Need to Know

Week in review

Equity markets up to end the year

The S&P 500 stock index rose solidly in December to round out a strong year for equity markets – up by nearly 30 percent.

Manufacturing contraction worsens

The ISM manufacturing index declined to its lowest reading since 2009 as new orders and production continue to weaken.

Week Ahead


Large reduction expected in trade deficit

The trade deficit should decline after the advance estimate for trade in goods showed a significant decrease in its deficit.

Nonfarm employment solid but slowing

One-time special factors helped to boost November nonfarm payrolls. December should see more modest, but still solid, gains in the absence of those factors.

Financial markets ended a banner year positively with the S&P 500 stock index up by nearly 3.0 percent in December. Positive geopolitical news (including the phase one trade deal with China and reduced odds of a hard Brexit) and further expansion of the Federal Reserve’s balance sheet to keep liquidity plentiful at the end of the year helped to boost equity markets. For the year, the S&P 500 index climbed by 28.8 percent — its strongest year since 2013. Aside from brief pullbacks in May and August, the market gains were consistent throughout the year — with a closing low on January 3 and a closing high on December 27. Even after accounting for the steep market decline in the fourth quarter of 2018, the S&P 500 index ended 2019 more than 10 percent higher than the peak level from 2018.