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December Market Review

While the ongoing trade dispute with China undoubtedly affected the markets in early December, the big story to borrow a line from the 1992 Presidential Election certainly  was “Its the Fed Stupid”.

The SPDR S&P500 ETF (SPY) finished the month down -8.8% while the NASDQ 100 (QQQ) ETF was off by -8.7%.

Yields on the Ten Year Treasury settled at 2.69% down from November’s close of 3.01%. Accordingly the iShares Core US Aggregate Bond ETF (AGG)  posted a negative return of 2.2 for the month.


The SPDR Gold Shares ETF (GLD)  provided some relief for investors as it gained 4.9% for the month.


Core ETF Performance


ETF                                                                              December                     Year to Date

SPY – SPDR S&P 500                                               (8.8)%                          (4.6)%

QQQ – Invesco QQQ (NASDAQ)                              (8.7)%                            0.1%

GLD – SPDR Gold Shares                                         4.9%                             (1.9)%

AGG – iShare Core US Aggregate Bond                   2.2%                              0.3%


The month started off with a 4.5% decline in the opening week on trade concerns.  Things got serious however with the Federal Reserve FOMC meeting and press conference on the 13th.    With concerns about a slowing economy and recent market sluggishness there was a consensus hope that Chairman Powell might signal a softening in policy outlook. Instead the Mr. Powell indicated that current policy was not restrictive and that he saw no need to change the approach to returning the Fed balance sheet to more normal level.  With that the route was on culminating with the Christmas Eave “massacre” which brought the month to date decline on the S&P 500 to nearly 15%, exacerbated no doubt by thin holiday market conditions.

Markets did stage a rebound heading into New Year’s. In fact  Chairman Powell, flanked by former Chairmen Bernanke and Yellen blinked at the American Economic Association event on Friday January 4th, indicating that the longstanding Fed “Put” is still in place, the markets reacted accordingly by shifting into full rally mode.



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DISCLAIMER: Nothing in this article should be construed as a personal recommendation or advice. Nor should anything in this article be construed as an offer, or a solicitation of an offer, to sell or buy any investment security. Barnhart Investment Advisory clients and principals may hold positions in any securities mentioned in this article. Investors should conduct their own due diligence and seek the advice of a financial and/or investment professional before making any investment decisions.


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