Stocks ended a tumultuous year on a positive note Monday. Still, the Dow Jones Industrial Average (^DJI -0.34%) finished 2018 down 5.6% and the S&P 500 (^GSPC -0.23%) lost 6.2%.
Today's stock market
| Index | Percentage Change | Point Change |
|---|---|---|
| Dow | 1.15% | 265.06 |
| S&P 500 | 0.85% | 21.11 |
Data source: Yahoo! Finance.
Healthcare led all sectors in 2018, with the Health Care Select Sector SPDR ETF (XLV -0.35%) up 6.2% for the year. Energy stocks were the big losers in 2018; the SPDR S&P Oil & Gas Exploration & Production ETF (XOP 0.83%) plummeted 28.2%.
As for individual stocks, General Electric (GE -0.61%) ended a tough year with a small gain and Merck (MRK -0.67%) added to its impressive 2018 performance.
Image source: Getty Images.
General Electric investors hope for a better 2019
2018 was yet another year to forget for investors of General Electric, with shares down 55% and the stock of the iconic industrial conglomerate getting booted out of the Dow Jones Industrial Average. Shares gained 0.8% today.
The bull case for General Electric is that the company still has strong and growing businesses in its aviation and healthcare segments. If new CEO Lawrence Culp can stabilize the company's power business in 2019, it may get back on the path to growth.
On the other hand, General Electric bears point to the huge debt it's carrying and the fact that the company is a serial disappointer, coming up with one bad surprise after another.
Incoming management teams want to get all the bad news out as early as possible in order to set the stage for a recovery, so while there may be some more disappointments in the next few months, a comeback for the stock turns on Culp's ability to renew confidence in General Electric in 2019.
Merck closes a big year with more gains
This was a year investors fretted over trade wars and a flattening yield curve, and generated frothy enthusiasm for marijuana stocks, but one place to make money in 2018 was in some relatively boring dividend stocks. Shares of pharmaceutical giant Merck increased 40% during the year, making it the top gainer in the Dow, and added 1.4% today.
Merck is riding continuing success of its cancer immunotherapy drug Keytruda, which is seeing rapid sales growth as it wins approval for treating a variety of cancers, including non-small-cell lung cancer. In times of market uncertainty, investors often seek out stable dividend payers, and large drug companies like Merck can fit the bill. The company recently boosted its dividend by 15%. It currently yields 2.9%.
Merck's success with Keytruda is likely to continue, but the company also has to overcome slowing sales of older drugs, and it doesn't have one of the strongest development pipelines among its peers. While the stock should continue to generate healthy and growing dividends for years to come, it has gotten rather pricey, and there could be better buys in the industry.
