Market Wrap-up for Dec. 31 - Three Trends to Watch in 2015

Market Wrap-up for Dec. 31 – Three Trends to Watch in 2015

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As 2014 draws to a close today, investors will look back on yet another positive year for broad markets. While this year saw its fair share of volatility and a brief sell-off, markets were able to find their winning ways yet again, ending the year on a strong note. Now, all eyes are on 2015 and what market segments will be at the forefront in the New Year. Below, we outline three trends investors should keep a close eye on as we enter 2015.

Crude Oil Battered

The latter half of the year put crude oil in the spotlight as the commodity lost over 40%. Analysts called for a bottom when prices hit $80, $70, and even $50-something per barrel, but the fossil fuel has yet to show any resilience. The massive drop in oil prices has hit big dividend stocks and has some worried about future profitability if prices remain depressed. Big name players like ExxonMobil (XOM) and Chevron (CVX) will likely be able to weather the storm, but smaller producers and explorers may feel the pinch.

Whether crude continues its slide or rebounds in the coming months, it will undoubtedly be one of the most watched corners of the market in 2015.

The Fed on Tap

At the risk of sounding like a broken record, the Fed will be under a microscope in the coming year. 2015 may prove to be the year that rates are finally raised, but it would not be the first time the Fed has delayed increasing rates. Dividend stocks have become particularly popular in the wake of near-zero rates, and it’s a trend that will likely continue in 2015. Even if rates are raised, the move up will almost certainly be minute. With rates remaining below 1%, don’t expect dividend stocks to fall out of favor anytime in the next year.

Instead, the Fed will have a bigger impact on the overall market in 2015, as its actions (or lack thereof) will help signal if the bull run is slated to continue or if it’s slowing down.

Nasdaq Surges, Dow Sputters

All three major benchmarks (the S&P 500, Dow Jones, Nasdaq) had positive returns in 2014, but their returns were relatively spread out:

QQQ v SPY v DIA

The Nasdaq set itself apart in the latter half of 2014 as it easily outperformed its peers. By that same token, the Dow Jones struggled in comparison to its peers, as the 30 blue chip stocks failed to keep pace with the S&P 500. We enter 2015 with the tech sector heating up (as evidenced by the Nasdaq) and a lagging Dow. While these three indexes are always in the spotlight, the Nasdaq and the Dow will be closely watched in 2015.

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