With just six trading days left in 2019, the S&P 500 appears poised to notch its best year of returns since 2013. And the week ahead will serve as a reminder of just how resilient the stock market is.
In a seven-day span in December 2018, the S&P 500 and Dow Jones Industrial Average both fell more than 11% and, at their worst, on Christmas Eve, these benchmarks narrowly escaped entering a bear market. That's defined as a decline of 20% or more from the most-recent high on a closing basis.
Around this time last year, some professional investors were declaring the bull market was over. Thankfully, they were wrong — stock prices began rising again before 2018 was over. By staying invested, you've seen the value of your portfolio rebound and then soar as the major benchmarks have notched several all-time highs this year including this past week.
The week ahead will likely be slow on Wall Street, even though the U.S. House of Representatives on Wednesday impeached President Donald Trump on two charges. So far, impeachment has proven to be a nonissue for the market, so traders will instead focus on some key economic reports: Durable goods orders and new home sales.
Here's what to watch in the stock market during the week ahead — and how the news could affect your bottom line.
What's happening: A few closely tracked measures of the housing market are scheduled for release in the week ahead. On Monday, expect reports on the number of new homes sold and building permits filed for new construction projects in the month of November.
Economists currently project that the number of new home sales slowed slightly for the second straight month, along with housing permits.
Why it matters: The housing industry has seen sluggish growth this year, but it's perked up more recently in the wake of the Federal Reserve cutting interest rates three times. So far this year, monthly sales of new homes are averaging the highest amount since 2007. The supply of homes for sale hit a record low for the month, which has sent prices up.
What it means for you: Wall Street monitors the real estate market so closely because the housing industry generally makes up to 18% of GDP, according to the National Association of Home Builders. And housing is perhaps one of the best gauges of confidence, because consumers need to feel optimistic about their financial situations to justify such a big expense.
Video by Jason Armesto
What's happening: It's been a choppy year for American manufacturers, as reflected by orders for durable goods, which are those meant to last at least three years. To blame? The ongoing trade spat between the U.S. and China, along with slower global economic growth.
On Tuesday, traders will monitor a monthly report detailing the number of orders to U.S. factories for big-ticket manufactured goods in November. Economists currently project these orders jumped the most since July, following a rebound in October.
Why it matters: The U.S. and China agreed to a so-called "phase one" trade deal earlier this month, though that came after the collection period for the durable goods orders report due Tuesday. Traders have been monitoring the broader manufacturing industry, particularly because it's been shrinking in recent months — and it made up about 11% of gross domestic product (GDP) as of 2018.
What it means for you: While your livelihood may not be directly connected with the manufacturing industry, changes in this sector can still affect you — especially when activity ramps up or slows down. What's more, a big uptick in this segment of the economy, particularly amid concerns of a slowdown, could help push stock prices even higher.
This time of year could bring some good news. Some traders are expecting the so-called Santa Claus rally, the market's tendency to go up at the end of the year.
Even if that doesn't arrive, the S&P 500 is poised to end one of its best decades ever with a bang. A $500 investment during 2009 in exchange-traded funds (ETFs) that track five of the major U.S. benchmarks would be worth between $1,500 and more than $2,400 today.
Something could always cause short-term market turbulence, including the upcoming 2020 election, but such bumpiness can be a good opportunity for long-term investors to buy stocks at lower prices. And no matter what happens in any given week, it's important to keep perspective and remain consistent with your investment strategy.
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