Stocks could ride a tailwind into 2018, bolstered by the best annual gains in four years in addition to the promise of a generous earnings boost through corporate tax cuts.
With the holidays over, the item’s time to get back to work quickly inside the four-day week. December’s employment report looms Friday as the first major economic report of the year. There are also ISM manufacturing in addition to monthly vehicle sales data on Wednesday.
The minutes through the Fed’s December meeting will also be released Wednesday afternoon, in addition to in which could provide some important clues as to Fed thinking on inflation in addition to interest rates. The Fed has forecast three rate hikes for 2018, in addition to some economists are right now expecting four. Inflation, which has been lagging the Fed’s target, could be the deciding factor in how aggressive the Fed will be.
Strategists expect 2018 to be another up year for stocks, although with smaller gains than 2017 in addition to most forecasts falling between 2,800 in addition to 3,000. The S&P 500 finished Friday at 2,673, slightly lower on the week although up 19.4 percent for the year, its best performance since 2013. The Dow was down 0.1 percent for the week at 24,719, although saw a gain of 25.5 percent for the year. The Nasdaq was down 0.8 percent for the week, at 6,903, although scored a gain of 28.2 percent, also the best year since 2013.
“Barring any surprises, I’m hoping for fresh money for the fresh month in addition to the fresh year,” said Art Cashin, director of floor operations at UBS. He said he’s also watching the first two trading days of the year, to see if they are positive. If they are in addition to the S&P 500 will be higher when taken together with the past week’s performance, in which could be a positive “Santa rally” period. The Santa rally period will be the last all 5 trading days of the year in addition to the first two days of the fresh year, in addition to if the market will be higher, the odds are better for a positive year.
Market milestones for 2017 include a return to higher oil prices, with West Texas Intermediate futures closing Friday above $60 per barrel, for once since June 2015. in which has helped drive a more than 6 percent gain for energy stocks inside the past month, even though the sector was down 3.8 percent for the year. The best performing sector was tech, up 37 percent for the year.
The dollar continued its yearlong slide in Friday trading, with the dollar index ending the year down 9.7 percent, its worst performance since 2003.
Meanwhile, the 10-year Treasury yield was at 2.409 Friday afternoon, just slightly under the 2.43 percent level where the item commenced the year. The 2-year yield meanwhile rose through 1.19 percent at the start of year to 1.88. The two yields are getting closer together, or flattening, in addition to are right now at the “flattest” in a decade. Some investors worry in which’s a sign of economic weakness ahead.
Washington will also be a focus in January as the item right now gets down to business on spending issues, after the White House in addition to Congress delivered a big tax cut package reducing corporate taxes to 21 percent through 35 percent, just before the holidays. although in 2018, the political scene promises to be more difficult, with potential fights over the debt ceiling in addition to various other issues ahead of key midterm elections.
Dan Clifton, head of policy research at Strategas said there are various other issues in which could also emerge early inside the fresh year. “Goodbye tax, hello trade. in which’s the start of the item, right there,” he said, with news on the administration’s review of potential steel in addition to aluminum tariffs expected in January.
“I’m just outlining in which there’s a little bit of risk right now,” he said. The administration could decide tariffs are warranted on aluminum for national security reasons. “This specific will be a brush fire, not a forest fire.”
Some strategists believe there are Great odds in which the negotiations on the North American Free Trade Agreement could fail, threatening the trade agreement. NAFTA will be being renegotiated by the U.S., Canada in addition to Mexico.
Traders have been concerned about Trump’s potential to be protectionist, in addition to whether he could actually take action.
“There’s a Great chance he’s going to get out there in addition to poke someone inside the nose,” said Cashin.