The stock market will be a choppy and frustrating at times, but it will be a “pretty good” year for equities and the economy.

That’s the theme of the just released Nuveen’s 2019 Ten Predictions report.

The report warns that stocks will have extended runs and declines this year but ultimately “bullish factors will overpower the bearish ones.”

The S&P will be up about 8 percent while bonds will continue to have little or no growth. Markets and the economy will face many challenges. There will be political turmoil, with divided government resulting in no substantive legislative action, along with a trillion-dollar deficit. Markets will remain volatile and the potential for a trade war will continue, the report continued.

All of this, the report warned, will create “a difficult environment for investors.” However, “we think it is fairly certain that there the U.S. will not fall into recession in 2019.” Indeed, the report said GDP growth will be between 2 and 2.5 percent, which is still above the long-term historic rate of return.

“The concerns about the market and the Fed pushing us into a recession got overdone in the fourth quarter,” said the report’s author, Robert C. Doll, senior portfolio manager and chief equity strategist with Nuveen. He said the December market selloffs created buying opportunities.

“There will be some more upside in 2019, but I think it is going to be bumpy,” he added. Doll predicts that the S&P 500 will end the year at 2,650 and, with dividends, will be up some 8 percent.”

That, he notes, is positive but below the historic 9 percent returns of the stock market. “We’ll be up for sure, but I am not overly rosy in my outlook,” Doll says.

The economic expansion will continue this year but at a slower pace than in 2018. “Despite (or maybe because of) that, if this expansion lasts until June 2019, it will become the longest ever economic upcycle,” according to the report.

Why will the equities party continue?

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