As we enter the final week of trading for the year, the Dow Industrial Average was not in the mood to break 20,000, although it came within 13 points early in the week. 20,000 is not a technical level, but more of a milestone figure as there is no price resistance to break at this new high. Nonetheless, it is a significant psychological point in the Average’s history. Activity this week was predictably low, with about half the average daily volume of last week, as traders took to the holiday weekend. And there wasn’t too much movement, either. The Dow and the NASDAQ were up about ½ of 1% for the week and the S&P 500 moved higher by half that. Sectors were mostly mixed, but the telecom stocks once again were the big winners with an average gain of 2.4%, followed by financials. Crude advanced $1.12 on the week, as investors are betting that OPEC and other oil-producing countries will honor their proposed production cuts.
With the last week of the year historically positive, Dow 20,000 is ripe for the mark. However, most of the good news on corporate tax reform, renewed economic growth and less regulation are all priced into the market at current levels. With equities up about 10% since the end of October, a short-term correction in January is a distinct possibility. Yet, over the longer-term, there is a good case for stocks with better times ahead for corporate earnings and dividends. And with rising interest rates, the fixed income alternatives, at this point, are not great.
Markets will be closed on Monday in observance of Christmas. In the meantime, enjoy the rest of the holiday weekend.
Here is the answer to last week’s trivia question: Founded in Rochester, NY in 1853, optical company Bausch+Lomb is: A division of Milan-based Luxottica; Publicly held and trades on the NYSE; owned by private equity firm Warburg-Pincus; or a unit of Valeant Pharmaceuticals. Answer: B+L is owned by Canadian drug firm Valeant Pharmaceuticals. Valeant, however, is looking to sell the business to shore up its balance sheet.
Today’s Trivia Question: The organization that is charged with restoring customer cash and securities left in the hands of bankrupt or otherwise financially troubled brokerage firms is? SIPIC, FINRA, SEC or FDIC.