At the conclusion of 2018, U.S. equities finished their worst year in over a decade. The Dow fell 5.6 percent, while the S&P 500 lost 6.2 percent and the Nasdaq Composite fell 4 percent.
December alone resulted in the Dow falling 8.7 percent and the S&P 500 losing 9 percent, making it the worst December since 1931. However, it appears the Federal Reserve is finally paying closer attention to the pulse of the markets.
This has resulted in the Fed taking on a more dovish tone as of late with two interest rate hikes forecasted for 2019 as opposed to three forecasted following the fourth rate hike in 2018. Fed Chair Jerome Powell referenced 2016 as a prime example of a year that warranted the Fed to be more adaptable with policy.
“No one knows whether this year will be like 2016,” said Powell. “But what I do know is that we will be prepared to adjust policy quickly and flexibly and to use all of our tools to support the economy should that be appropriate to keep the expansion on track, to keep the labor market strong and to keep inflation near 2 percent.”