A Dismal December

Monthly Market Snapshot: December 2018


Equity market performance in December was dismal. In the United States, the S&P 500 plunged 9.2% and the Dow Jones tumbled 8.7%. The indices closed out the year with 6.2% and 5.6% declines, respectively. While the worst performance in a decade, U.S. markets outperformed international markets with European, Japanese, and Emerging Market shares finishing the year with declines of 18.5%, 14.5%, and 16.6%, respectively.

The uptick in market volatility in 2018 was not a surprise, but the weak equity market performance against a backdrop of generally solid economic data was. While global growth has indeed been slowing, we believe that the economic backdrop remains more positive than equity markets are currently suggesting. As a result, our Chief U.S. Equity Strategist Tobias Levkovich is setting his year-end 2019 S&P 500 target at 2,850 (about a 14% upside from today’s levels).

Citi’s Global Investment Committee (GIC) has been reducing its exposure to global equities and has been increasing portfolio quality. The GIC has a global equity overweight of +1.0% with modest overweights on Europe, Emerging Asia, and Emerging Latin America. On the fixed income side, preferred assets include short-duration, higher quality debt like U.S. Treasuries.