In sharp contrast to the stock market stability in 2017 and 2019, was abnormally high in the quarter ended December 31, 2018 (4Q18). Fourth-quarter 2018 ended up being the worst quarter in the stock market in over nine years as the S&P 500 closed with a 6.6% return in the fourth quarter and the bond market behaved in an orderly fashion. Global economic growth was synchronized and set to accelerate its pace. The Tax Reform Bill passed by the U.S. Congress was going to increase corporate capital expenditures and the individual tax cuts would trickle down, acting as a multiplier to growth.
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The S&P 500’s-13.52% decline in the fourth quarter was the worst quarterly performance as the global stock markets in 2018 ended in a maelstrom of volatility. The markets declined significantly in the fourth quarter, this being the second major pullback of the year. This marks the first time in nine years that the S&P 500 posted a negative return for the year (-4.4%). Most developed markets had double-digit declines with some defensive asset classes turning in positive results. The global sell-off in the fourth quarter was driven by concerns of slowing global growth, trade issues, and the central bank’s reduction of monetary easing.
2018 felt like the stock market took us on a wild roller coaster ride. The fourth quarter certainly felt like a punch to the gut, especially because we had just experienced a correction earlier in the year, and in August the S&P 500 had just got back to its previous high set at the end of January. Immediately thereafter, a second sell-off began. The fourth-quarter decline was deeper from top to bottom than the previous ones and the breadth
was greater well.