Midyear Investor's Guide

A tug-of-war between market forces is likely to drive your returns for the rest of 2019. Here’s what you need to know.

- Sergei Klebnikov, Sarah Max, And Ian Salisbury

5 Trends to Bet On in 2019

investors have been suffering From a case oF whiplash. Late last year, the stock market, having posted one of the worst Decembers in decades, seemed to be Air-Ling with the bear market territory. Then suddenly the picture brightened. The Fed, which had been gradually hiking interest rates, relented. Meanwhile, U.S. corporate proas and the Chinese economy, both major drivers oF U.S. growth, began to look healthier than they had just a few months before. By April, the S&P 500 had set a new record high.

Crisis averted? loL so Fast. Remember that while the stock market loved the Fed's rate-hike pause, it's a sign policymaker see growth slowing, not speeding up. What's more, even amid the rally, the bond market began giving oFF bearish signals, all oF which suggest the underlying tensions behind December's swoon haven't resolved, only moved to the background. The same tug-of-war between market Forces is likely to drive your investment returns For the rest oF the year—and into 2020. Here is what you need to know.

1. Rates Hold Steady

TWO BIG THINGS IMPACT STOCK PRICES: “The cost of money and earnings,” says Ernie Cecilia, chief investment officer of Bryn Mawr Trust in Berwyn, Pa. While the U.S. government can do only so much to boost corporate earnings, it plays no small role in controlling the cost of money by setting targets for the Federal funds rate—what banks pay for short-term loans to one another.