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Q4 Market Report & Outlook for 2019

Markets and the Economy Reconnect

Financial markets suffered a sharp sell-off in the fourth quarter. The S&P 500 fell 13.5% over the final three months of the year – and 9% in December alone – finishing 2018 down 4.4%.

The average stock in the index finished 25% below its 2018 high. The losses cap a challenging year for investors, with virtually everymajor asset class losing money. In only two of the last fifty years did marketsapproach similar across-the-board losses -- 2008 and 1973, which were two ofthe worst periods for the economy in the post-war era.

Despite market losses, the U.S.economy showedcontinued strength (as outlined on page 2 here).This kind of divergence between economic and financial market performance is highly un usual. It is rare for a bear market in stocks to occur outside of a recession – which raises the question of why financial markets have struggled. 

We see two key, intertwined reasons: political uncertaintyover the Federal Reserve and the trade war with China.

For stocks to stabilize and rebound, we may need to see more positivedevelopments in these areas, which would allow investors toshift their focus away from Washington and allow stockprices toreconnect with solid corporate and economic fundamentals.

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DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.

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Hefren-Tillotson Inc. is a leading diversified financial services firm providing investment and retirement plan management and comprehensive, financial planning through MASTERPLAN® for individuals and businesses. The firm’s wealth management services are administered by Certified Financial Planner (CFP) professionals, Chartered Financial Analyst (CFA) Charter holders, attorneys, Chartered Life Underwriters, and CPA/PFS’s. Hefren-Tillotson offers corporate services including 401(k) retirement planning, executive financial counseling, fiduciary reviews and workplace financial planning seminars. Founded in 1948, the firm is headquartered in Pittsburgh and has offices located in Pittsburgh, Butler, Greensburg, North Hills, and South Hills. MEMBER SIPC.