The year 2014 has been a good one for stocks. Domestic economic strength has boosted the markets, particularly in the second half of the year. However, the year was not without its headwinds. A relatively slower first half witnessed a decline in GDP, caused primarily due to harsh winter weather.
Meanwhile, concerns from foreign markets also made their presence felt. Among other downsides was the plunge in oil prices, which continues to be a cause for concern.
Economic Data in 1H 2014
A surprise weaker-than-expected US jobs report left investors worried about betting big on equities in January. It was reported in January that nonfarm payroll employment moved up 74,000 in December.
Meanwhile, GDP shrunk 2.9% in the first quarter of 2014. This is the worst performance in five years.
Ebola Scare
After affecting the lives of 8,000 to 9000 people in West African countries, the first U.S. case in Ebola was diagnosed on Sep 30, 2014 in Texas. Share prices of airline stocks trading in the U.S. plunged after the second Ebola case in the U.S.
Leisure companies were also affected and lost significant value over the past few months as a large number of people put their travel plans on hold. Speculations that an Ebola patient could be traveling on the same cruise impacted passenger travel, thereby taking a toll on cruise operators.
Impact of Global Issues
China
Economic data from China were largely on the negative side from the beginning of this year. Additionally, violent confrontation took place between pro-democracy supporters and the Hong Kong government in September. Ultimately, on Nov 21, the People's Bank of China (PBOC) announced its surprise decision to reduce interest rates.
Russia
An increase in political tensions between Russia and the West over Crimea severely affected markets on certain days, mostly during March-April. Imposition of sanctions by the U.S. intensified such tensions.
Benchmarks suffered their biggest losses in months in July on reports that a Malaysian Airlines passenger jet was shot down near the Ukraine-Russia border. In August, the Russia-Ukraine crisis led to fresh sanctions against Russia.
