Despite the fact that at the beginning of 2016 was for the Dow Jones Industrial Average’s worst in history, according to his results, he showed the best result in the year 2013 against the backdrop of the hopes of the investors to an improvement of the economic Situation.
The index of 30 “Blue Chips” in the year of 2016, scored 13%, although on Friday – at the last meeting of the year – it fell by 0.3% to 19763 points. S&P 500 for the year increased by 9.5%, and the Nasdaq Composite climbed to 7.5%, what is its maximum increase in the year 2014.
The rally of the past year was a continuation of the bull market, the DJIA rose by three times with a Minimum of financial crisis – the level of 6547,05 points achieved in March 2009. The stock market in 2016, experienced a series of shocks, including fears of a recession, the decision of the British withdrawal from the EU and the election of Donald Trump, US President.
The majority of the increase in the DJIA in the year 2016 for the second half of the year. Recovery of the profits of enterprises, strengthen the growth of the US economy and the stabilization of oil prices contributed to the optimistic investors in respect of shares. The rally has the sales after the election of Donald Trump President in the elections on may 8. November. Investors bet that the new government adhere to favorable business policies, including taxes, shorten, soften, supervision and measures of fiscal incentives. DJIA 22. February for the first time in history ended the trading above the level of 19000 points, but with the election day reached almost 8% by closing several records.
However, recently, the rally stalled, and any doubt as to the fact, further, whether the growth in the market in the year 2017 will be achieved and whether Dow Jones Industrial Average 20000 points, the next crucial brand. The index at the end of the year, suffered the first losses for the week, since the time of the elections. Policies Trump may not live up to expectations, and because of the rally, the shares in the historical comparison has become even more expensive.
“Now we need to the most difficult, said Liu Пьянтедоси, Portfolio Manager, Eaton Vance. – What, in fact, a new policy will be? This is the true source of the uncertainty.”
And yet stock indices ended the year in 2016 is better than he has started. Then the DJIA spent most of the poorest in the first five days of the year, to 6.2%. The decline in the stock market of China and the weakening of the Yuan provoked sale all over the world. Investors concerned about the impact of the slowdown of growth in the second largest economy in the world, including about the likelihood of a recession in the United States. The DJIA lost more than 10% by the end of 2015, February 11 reached at the level of the DNS 15660,18 points – Minimum for two years. The Futures on WTI crude oil on the New York Commodity Exchange reached the low point in 26,21 US dollars per Barrel, that is, to a Minimum since 2003.
Then the price of oil has risen sharply in view of the fact that the members of OPEC and other producing countries have agreed on a reduction to a two-year pressure on the market due to an overabundance of suggestions. The oil and gas sector in the past year showed the best result among the 11 sectors in the S&P 500 by 24%.
Fears about the U.S. economy subsided.
According to the Commerce Department, the U.S. GDP in the 3. Quarter rose by 3.5% year on year, adjusted for Inflation and seasonality. This was the highest figure for two years, during the two previous quarters, the GDP grew by less than 2%. The unemployment rate fell to 4.6%, and Corporate profits will grow after several quarters of decline.
The Fed abandon the largest part of the year, interest rate hikes, but such a decision in December for the first time since the end of the year 2015. To understand the members of the Central Bank is also given the opportunity for further improvements, what is the optimistic mood regarding the U.S. economy.
The growth in the stock market and weak economic growth, the impetus for mergers: companies found the courage to transactions, to increase the opportunities for savings and profits. According to Dealogic, in the year 2016, it was announced on the absorptions for the sum of 3.7 trillion dollars. Although, compared to the record value of the year 2015 in the amount of 4.4 trillion US dollars, total assets declined by about 15%, in 2016 year, was in third place to mergers.
Improvement in the Outlook for the economy at the end of last year, a rise in the Dollar. The Dollar index the Wall Street Journal, appraising Dollar to a basket of 16 currencies, reached in the year 2016 is about 3%. But the strengthening of the U.S. currency may jeopardize the recovery, which started the company’s profits, since the US exports will decrease, more expensive for foreign buyers, but foreign revenue in terms of dollars.
In addition, some investors doubt that the profits of the company grow strong enough to support the valuation of the shares is greater than the average historical values. According to FactSet, on Thursday shares in the composition of the S&P 500, on average, traded at a p / e ratio of 12 months on the level of 21x, which is above the average for 10 years – 16x.
The investors hoped to turn increasingly to the growth of the market at the end of the year, but some have noted that the rally becomes more resilient, if you added support from policy measures and the Situation in the economy.
“I’m sure that many of the assumptions in the last few months, are continuous presumptions, and we do not have the slightest idea of what to expect, says Jim Tierney, Investment Director for the concentrated growth in the US, AllianceBernstein Holding LP. – In terms of the creation of forecasts in the first few months of the year 2017 will be more important than the last months of the year 2016″.
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