Wall Street took a well-needed breather this past week after a strong post-election run. Despite a poor start for the year, the Dow Jones Industrials finished 2016 with a gain of 13.5% and the S&P 500 by nearly 10%. The NASDAQ lagged the major averages with “only” a 7.5% advance, as technology and bio-techs were under performers for most of the year. The small-cap Russell 2000, however, was the star of the averages with a 19.5% advance. Adding in dividends, total returns were quite respectable for investors this past year.
For the holiday-shortened week, there were mostly down arrows and no sectors were positive. The Dow and the S&P were negative by about 1% with technology, again, leading the pack with a negative 1.6% on average. Basic material and energy stocks were also lower. Crude was virtually flat on the week, but gold made a comeback with a gain of $18.10/oz. on continued inflation fears.
We should see continued progress for stocks in 2017, although the bulls are not without some challenges. Valuations are closing in on 20 times earnings for the first half of the new year, an elevated level that discounts much of the good news ahead. However, given a possible 3% growth in GDP and reductions in corporate taxes, there are potential rewards out there, while probably not as good as 2016 levels.
Markets will be closed on Monday in observance of the New Year’s Day holiday. Enjoy the rest of the weekend and all the best to my loyal readers for 2017.
Here is the answer to last week’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. Answer: SIPIC (Securities Investor Protection Corporation). Although created under federal law in 1970 and overseen by the Securities & Exchange Commission, it is a private, member-funded organization and, unlike the FDIC, not an agency of the United States Government.
Today’s Trivia Question: The amount of net inflows to Exchange Traded Funds in 2016, was? $85 billion, $102 billion, $282 billion or $344 billion.