After having had a choppy start of 2018, the US stock market had a rough ending as well. Not only did all three major stock indexes lose ground, but they actually gave up all of their gains and ended the year in the red.
There were several reasons behind the “bloodshed” in the markets last month. Mainly, investors were concerned about the trade issues with China, the Fed’s hawkish approach to interest rates and sluggish global growth.
In this way, the S&P 500 lost 10.16% in December, ending the year 7.01% in the red. Dow Jones Industrial Average slid by 9.68% during the month, despite registering the biggest one-day gain (of around 1,000 points) on December 26, and declined by 6.03% during 2018. Last but not least, the Nasdaq Composite dropped by 10.83% in December, although it closed the year slightly better than the rest, losing only 5.30%.
December had a positive start, with stocks rallying on the back of the news that the US and China agreed not to add any tariffs in order to ensure smooth negotiations for 90 days. However, things quickly went south after Huawei CFO Meng Wanzhou was arrested in Canada for allegedly violating US sanctions. The arrest sparked concerns that it could put a damper on trade negotiations between the US and China.
On December 19, the stock market took another hit after the Fed hiked the benchmark interest rate by 25 basis points to 2.25% to 2.50%. Even though the hike was expected, investors were displeased by the comments made by the Fed chair Jerome Powell. The Fed plans to have two hikes next year instead of the previously-expected three, but the central bank also plans to continue its balance sheet run-off.
Furthermore, on Christmas eve, the stock market witnessed a major sell-off amid comments from Treasury Secretary Mnuchin, who said he had held talks with CEOs of six US banks to ensure they have a sufficient lending capacity. The government’s involvement was seen as a sign of concern, which led to investors heading to the exits. The day after Christmas stocks rebounded. Amid the ongoing government shutdown and President Trump’s comments that the negotiations with China are going well, the markets gained some ground, but didn’t manage to recover from the sell-off in the previous weeks.
Another development last month was the Farm Bill, which was signed into law by President Trump on December 20. The bill mostly concerns the Supplemental Nutrition Assistance Program (food stamps), with the bulk of the $867-billion funding for the next ten years allocated to it. However, the bill also included a number of provisions related to crop insurance and the legalization of hemp cultivation. This was a major step forward from the 2014 bill, which allowed hemp cultivation for research purposes. The legalization of hemp also means its removal from the Schedule I of Controlled Substances Act. As a result, it also removes hemp-derived cannabidiol. Cannabidiol is a component of cannabis that does not have a psychoactive effect, but is known to have many benefits, including anti-inflammatory and pain-relief effects.
The only issue that companies focused on CBD currently face is the Food and Drug Administration, which still considers CBD a substance that cannot be added to food products or sold as a dietary supplement, given that it represents an ingredient in a drug, Epidiolex, which the FDA approved last year. However, experts consider that the industry will reach some sort of agreement with the FDA, which would allow the sale of CBD products.
In the meantime, among Financial Advisors, it was business as usual and their most searched tickers covered a variety of companies and industries, with or without any direct connection to the major events affecting the stock markets. According to TrackStar, InvestingChannel’s official newsletter capturing and analyzing the trends of Financial Advisors, the most searched ticker last month was Access National Corporation (NASDAQ: ANCX), a regional mid-Atlantic bank, which lost around 18% amid the broader sell-off. On the second spot was Corning Incorporated (NYSE:GLW), which on December 13 announced a long-term supply agreement with WaveOptics to deliver augmented reality optics.
OTC-traded cannabis penny stock Terra Tech Corp (OTC: TRTC) was the third most-searched ticker among Financial Advisors last month, as the company was slapped by a lawsuit concerning its dispensary in Nevada.
The fourth and fifth most-searched tickers were Pfizer Inc. (NYSE:PFE) and Shaw Communications Inc (NYSE:SJR). Pfizer Inc. (NYSE:PFE) saw a number of developments in December into which we are going to take a deeper look.
Overall, Pfizer’s stock lost 5% last month, but gained over 18% during 2018. In December, Pfizer announced the launch of a Phase 3 study of Breakthrough Therapy-designated PF-06482077, a 20-valent vaccine candidate for the prevention of invasive disease and pneumonia caused by Streptococcus pneumoniae in adults over 18 years old. The company also announced positive results from a Phase 3 study of XTANDI (enzalutamide) plus androgen deprivation therapy in men with metastatic hormone-sensitive prostate cancer.
In addition, Pfizer reached an agreement with GlaxoSmithKline (NYSE:GSK) to combine their consumer health businesses into a joint venture that would have sales of $12.7 billion and create $650 million in cost synergies.
However, not all news delivered by Pfizer in December were positive. The pharmaceutical giant also had to pull the plug on a Phase 2b clinical trial of a multi-antigen vaccine candidate for Staphylococcus aureus after determining that the trial would yield a low probability of success. Its joint Phase III study with Merck & Co., Inc. (NYSE:MRK) of Avelumab for the treatment of ovarian cancer was also canceled after a planned interim analysis didn’t provide support for the initial hypothesis.