After The Close - Wall Street began the final trading day of 2017 on a slight up note, as giddy investors sought to further celebrate what was a stellar and record-breaking year for the stock market. In all, the Dow Jones Industrial Average, which has about quadrupled since the bear market lows of early 2009, pushed ahead by more than 25% in the just-ended 12 months, with the S&P 500 Index close behind with a full-year advance of about 20%. Leading the way higher were the NASDAQ and the NASDAQ 100, with gains of roughly 30% each.
All of this, of course, came on top of steady advances though the first seven years of this extended bullish run. In the latest year, the optimism was fueled by steady growth in the economy, by additional headway on the corporate earnings front, and by passage of the long-anticipated reform of the nation's tax code, the center piece of which was a reduction in the headline corporate tax rate from 35% to 21%. So, stocks forged ahead during the year, with nary a hiccup in between, with the momentum, in fact, building late in the year, as the tax bill passed.
Individually, it was a banner year for a number of blue chips, with the Dow's best performers being Boeing (BA - Free Boeing Stock Report) and Caterpillar (CAT - Free Caterpillar Stock Report). Of course, while most Dow issues rose in price in 2017, there were some notable laggards, with a couple of issues actually shedding value in the latest year. Here, the major casualty was ailing industrial behemoth General Electric (GE - Free General Electric Stock Report), which tumbled by some 45% for the 12 months on earnings concerns. It also halved its quarterly disbursement.
As for today's market, the bulls sought to extend the recent rally early on, but ran into some minor resistance, as another light news day kept traders away from the fray. Thus, after the modest opening move higher, the sellers took the market a bit lower as the first hour of trading passed. The losses then increased for a time as we headed toward the noon hour in New York, with targeted profit taking in some of the old year's winners being offset by selective bargain hunting in a group of 2017 market laggards.
The day's lackluster pattern then continued into the afternoon, with the Dow staying moderately in the loss column as the clock ticked down on this banner year. Breaking things down, there was a more or less even divide among gaining and losing equity groups, just as there was between advancing and declining stocks on the Big Board. Of some note among the blue chips, financial services giant Goldman Sachs (GS) faltered on fourth-quarter profit concerns. Overall, though, it was a day of comparatively little movement among most stocks until near the close.
Things then deteriorated down the stretch, so that as the final session of 2017 concluded, the major indexes were all sitting with solid losses, having fallen back further as the final minutes ticked down. Even with this late selloff, however, which pushed the Dow down by some 115 points and the NASDAQ lower by more than 45 points, the month and year concluded with strong gains, and with some hopes that 2018 will get off to another winning start. As to the new year, we wish all of our readers a happy, healthy, and prosperous 12 months to come. - Harvey S. Katz, CFA
At the time of this reports writing, the author had positions in GE.
Before The Bell - Wall Street began the penultimate trading day of the year on a positive note, albeit a contained one, as the blue chips strengthened even as the biotech issues, many of which are domiciled on the NASDAQ, struggled. Boosting the Dow Jones Industrial Average, which remained steadfastly in the black throughout the morning, were modest gains in International Business Machines (IBM – Free IBM Stock Report) and Apple (AAPL – Free Apple Stock Report) at the time. In the meantime, commodity prices, which have been rallying, stayed near their highs for 2017. Oil, a key commodity worth watching, also held near its highs, passing hands at just below $60 a barrel in New York trading.
Overall, the day's positive tone, was not abetted by strong volume, as trading remained light, with many individuals active in the stock market being on vacation ahead of the New Year's celebration. Those that were around, though, were buying more than selling. So, as we headed toward the noon hour in New York, the Dow was holding onto a gain just north of 40 points, while the S&P 500 and the NASDAQ were ahead nominally. Meantime, in news out in the morning, the Chicago Purchasing Managers Survey noted that activity had reached its highest level in more than six years.
Little changed as the afternoon commenced, with this light trading day continuing to see the Dow Industrials remain modestly in the black, while the NASDAQ, once lower, also started to firm up. The smaller-cap indexes also began to gain a little traction following a generally weaker opening. Overall, there has not been much of a Santa Claus rally this week, as most of the fireworks were seen earlier in the month, as stocks surged further on expectations, since realized, for tax reform passing. On the whole, though, this has been a historic year for equities, as the bull market, now almost nine years in duration, remained alive and well.
As we moved further into the afternoon, the same pattern persisted, with the Dow staying in the win column, along with the other indexes, if somewhat less so, on this light news day. And on that count, there was little of note to report. To wit, oil eased a touch; Treasury yields ticked up somewhat, with the benchmark 10-year Treasury climbing to a yield just north of 2.43%. Finally, weekly jobless claims, up sharply the week before, settled in unchanged in the latest seven-day stretch, holding at 245,000. Meantime, continuing claims ticked up a bit further.
The market then strengthened as the session drew to a close, with the Dow climbing to a session-best gain on the day of 63 points. Moderate improvements also were noted on the S&P 500 and the NASDAQ, with proportionately stronger gains on the S&P 400 and the Russell 2000, suggesting some broadening out of the late advance. Elsewhere, nine of the ten major equity groups finished ahead on the day, led by a three-quarter of a point advance in the basic materials, while gaining stocks led losing issues by a count of almost two to one on the Big Board.
So, following this broad, but still modest win, that lifted the Dow again past 24,800, the markets now are poised to finish out a strong year for equities. And on this final day of trading, we see that shares in Asia mixed in overnight trading, while in Europe, the major bourses are thus far tracking flat to lower this morning. Meanwhile, oil prices are up, climbing past $60 a barrel in New York and Treasury yields, up yesterday, now are a tad lower in dealings this morning. Finally, U.S. equity futures are moving in a positive direction, at this hour, thus pointing to a higher open when trading resumes. - Harvey S. Katz, CFA