After Rocky Year-End, Risks Follow Investors into New Year
In the final quarter of 2018, interest rate and growth fears, along with geopolitical events, sparked volatility in the financial markets and reversed many of the outsize stock gains notched earlier in the year. The S&P 500 posted a loss of about 6.2% for 2018. After falling into bear market territory, defined as a drop of more than 20% from recent highs, the tech-heavy NASDAQ was down 3.9% for the year overall.
For the first time since 2008, all three of the major U.S. stock indexes (Dow, S&P 500, and NASDAQ) were set to record annual losses. Investors may feel shell-shocked after the worst December for stocks since 1931, but it's important to maintain some perspective. The recent correction was preceded by the longest bull market in history, so it could be viewed as an overdue repricing of stocks, as well as a reality check brought on by waning growth expectations.