Equities turned down as coronavirus fears offered an easy opportunity to take profits. The virus could still be underappreciated given the large number of cases and uncertainty on key attributes.
Fourth quarter earnings reports have started coming in and more companies are beating expectations than not. Close to 12% of S&P 500 companies have announced so far. Of the companies that have announced, 67% reported earnings above consensus, 9% in-line with consensus and 24% below consensus.
Equities continued to run as we hit the middle part of the month. The S&P 500 added another 1.2% for the week. Emerging markets were up 2.4% and even bonds advanced as the Barclays Bloomberg Aggregate Bond Index gained 0.6% on the week.
The year started with an event that caused volatility in oil markets. The drone strike of the Iranian General, Qassem Soleimani, led to swings in the energy markets. The price for WTI Crude Oil shot up by 3% the day the strike was announced.
Equities posted strong returns for the month of December with the S&P 500 up 3.0% and emerging market equities up 7.4%. For the year, the S&P 500 gained 31.5%, which bettered small caps by roughly 6%.