The S&P 500 has set more than 30 all-time highs in 2019 and surged nearly 30%.
Next week brings the start of a new year and a new decade, which means new periods of comparison for investors in the stock market. Still, there are some lingering loose ends to wrap up for 2019, namely economic reports for December and the fourth quarter more broadly.
While the New Year's Day holiday makes for a shortened trading week, minutes from the Federal Reserve's most recent meeting are scheduled for release on Friday, January 3. There aren't likely to be any surprises in those meeting minutes but traders will also monitor reports on housing, manufacturing, construction, and consumer confidence for signs of late-year gains.
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: Economists currently project that construction spending rose in November following two months of declines. The report, scheduled for release on Friday, January 3, details the dollar value of construction work completed each month — including private residential and nonresidential projects, along with federal, state, and local activity.
Why it matters: The decline in construction spending in September and October offered a cautionary note about the U.S. economy. That's because the Federal Reserve cut interest rates three times this year in an effort to stimulate growth by making it cheaper for consumers and businesses to borrow money — and economists who had hoped more people would spend on building houses were disappointed. As of October, private residences accounted for about 40% of construction spending, while private nonresidential projects made up almost 35%.
Traders will be watching this report to see if the trend has reversed and more people are spending on home construction again. That would underscore the idea that the economy is expanding, even if at a moderate pace.
What it means for you: This report alone isn't likely to move the stock market, but traders use it to assess whether consumers and business leaders are feeling more confident about undertaking expensive construction projects. And even if you don't plan to build a home or your livelihood isn't directly connected with the construction industry, changes in this sector can still affect you — especially when activity ramps up or slows down.
What's happening: According to early reports, the U.S. holiday shopping season got a boost this year from record online sales, and that suggests consumers were feeling cheery heading into the end of the year.
A closely watched survey from the Conference Board, scheduled for release on Tuesday, could help experts get a better sense. Economists currently forecast that sentiment improved for the December reading to the highest level since August. A separate survey released earlier this month showed that sentiment rose slightly.
Why it matters: Economists care so much about these surveys because whether Americans are feeling more or less confident affects whether they'll cut back on big-ticket purchases like homes and cars. And consumer spending accounts for more than two-thirds of gross domestic product (GDP).
What it means for you: Consumers have been very resilient this year, even in the face of higher tariffs and the impeachment of President Donald Trump in Washington.
Still, it's important to monitor trends because how your neighbors feel matters to the overall economy — and to you. If people don't feel confident, they'll spend less money, which in turn affects larger trends like whether employers add jobs or start shedding them, and broader GDP growth.
The stock market is set to end higher for the fourth straight month, and January historically is one of the strongest months of the year for the S&P 500, according to figures compiled by Yardeni Research. Experts forecast that the market will continue to rise in 2020.
The stock market has performed extremely well over the last 10 years. A $500 investment made 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. And it's become cheaper and easier than ever to invest over the past decade, too.
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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