Page 25 - ARUBA TODAY

BUSINESS Monday 24 deceMber 2018
A25

Will stocks rise in 2019? Maybe, but it’ll be stressful

By STAN CHOE
Associated Press
NEW YORK (AP) — No mat-
ter which way the stock
market goes in 2019 — and
Wall Street has ample argu-
ments for either direction
— expect it to be another
gut-wrenching ride.
The market is facing a long
list of challenges this up-
coming year, from expec-
tations for slower economic
growth around the world to
the restraining effect of ris-
ing interest rates. And the
global trade war is still cre-
ating uncertainty as inves-
tors guess how much pain
it will ultimately inflict.
All those risks have mar-
ket strategists along Wall
Street forecasting another
turbulent year for stocks,
and potentially one of the
most difficult years for in-
vestors since the bull mar-
ket began its record-setting
run in 2009. That follows up
on a 2018 where swings of
hundreds of points within a In this Nov. 28, 2018, file photo, a television screen on the floor of the New York Stock Exchange shows a headline for the Dow Jones
single afternoon became industrial average.
fairly common for the Dow Associated Press
Jones Industrial Average. Asset Management’s, and But this year has been dif- ing from the Great Reces- 2.9 percent in 2018. It’s also
As 2018 showed, higher risk “Lower expectations” was ferent. The S&P 500 is down sion in 2009, and it got a big forecasting slower growth
doesn’t always mean high- Barclays’. 9.6 percent and is on pace boost this past year from in the euro area, Japan
er rewards. As of Friday, all All the cross-currents push- for its first down year in a tax cuts, which helped and China.
major U.S. stock indexes are ing and pulling markets decade after including div- corporate profits surge at Analysts are likewise fore-
down more than 8 percent have analysts along Wall idends. It also created a lot their fastest rates in eight casting a slowdown in U.S.
for the year. And many Street recommending a of heartburn getting there, years. The current eco- corporate profit growth,
strategists are forecasting a contrasting array of strate- with two separate drops of nomic expansion will sur- though still positive. That’s
subdued performance for gies. Some suggest focus- 10 percent over the course pass the 1991-2001 stretch key because stock prices
stocks in 2019. ing on stocks from emerg- of the year. as the longest on record if tend to track with corpo-
“Ironically ... one would ing markets, where pro- “This is the brave new world the economy avoids a re- rate earnings over the long
expect higher returns with ponents say particularly for investors,” said Rich cession through July. In the term.
higher risk, but for the sharp drops in price have Weiss, chief investment of- economy’s favor are the Wall Street expects S&P
past two years we’ve un- left them looking cheap. ficer of multi-asset strate- still-strong job market and 500 earnings growth to
derscored a slightly more Others say high-quality gies at American Century consumer confidence. drop by more than half
treacherous environment bonds look like the safest Investments. “It’s been nine But concerns are rising that from this year’s 20.3 per-
for investors: higher risk and bet given all the expected years, 10 years, so it’s go- a recession may be pos- cent rate, in part because
lower returns,” Vanguard’s turbulence. And some opti- ing to be a shock to some sible in 2020 or even the companies will no longer
global chief economist Joe mists are forecasting a big of the newer investors who latter parts of 2019. The be getting the boost of the
Davis said as he unveiled bounce-back year for U.S. were not around in 2008 or Federal Reserve is raising first year of new tax rates,
his forecasts. stocks, which they say no in prior market turns.” interest rates — it indicated according to FactSet. But
He expects global stock longer look expensive rela- Of course, no forecast is two more increases may the expected 7.9 percent
markets to return 4.5 per- tive to corporate earnings. perfect. A year ago, Wall arrive in 2019 following four growth rate is still a good
cent to 6.5 percent annual- As investments of all types Street was broadly opti- this year— and other cen- one this far into an eco-
ly over the next 10 years, in dropped this year, investor mistic about stocks and tral banks are stepping off nomic expansion.q
dollar terms, versus the 12.6 psychology underwent a was forecasting moder- the accelerator on stimulus
percent they had provided reset. For most of the last ate gains, largely because for their economies, which
annually since the market’s decade, markets powered economies around the remove big supports. And
bottom following the 2008 higher in a largely smooth world were growing in sync. if inflation spikes unexpect-
financial crisis. and gradual way. That But the optimism fell apart edly higher, it could push
A quick glance at the titles meant big rewards for in- as the year progressed and the Fed to get more ag-
of the 2019 outlook reports vestors who saw any dip growth rates diverged, in gressive about raising rates,
for various investment hous- as an opportunity to buy part because of rising trade which would further hinder
es shows the increased at lower prices. The market tensions. growth.
caution. “The end of easy” recovered from every wob- Much will hinge on how The International Monetary
was Wells Fargo Investment ble to set records again resilient the U.S. economy Fund expects U.S. eco-
Institute’s title. “Navigating and again, often quite remains in 2019. It has been nomic growth to slow to
volatile markets” was UBS quickly. accelerating since emerg- 2.5 percent next year from