- Stocks edge up to begin quiet week. U.S. markets are slightly higher in early trading, kicking off what is likely to be a low-volume week on scattered data releases ahead of the holidays; though a speech by Federal Reserve Bank (Fed) Chair Janet Yellen this afternoon will garner attention. Friday’s session saw the S&P 500 (-0.2%) slip into negative territory for the week, as the heavily weighted technology (-0.8%) and financials (-0.9%) sectors lagged; rate-sensitive utilities and real estate both moved up more than 1%, despite only a 1 basis point (.01%) drop in the yield on the 10-year Treasury. Overnight, Asian markets were modestly lower, led down by the Hang Seng (-0.9%) after China stated it would take measures to control asset bubbles in 2017; major European indexes are near flat in afternoon trading, with the STOXX Europe 600 down 0.1%. Finally, WTI crude oil ($52.70/barrel) is slightly lower, COMEX gold ($1,141/oz.) is rising by 0.3%, and the yield on the 10-year note is down to 2.55%.
- 2016 calendar winding down. Although there are a few key events on tap this week (i.e., a speech by U.K. Prime Minister Teresa May on Brexit, the Bank of Japan’s final policy meeting of the year, and Vladimir Putin’s only press conference of 2016), the calendar is fairly quiet. Data on new and existing home sales, the service sector Purchasing Managers’ Index (PMI) and durable goods orders and shipments are the key U.S. data releases. Overseas, China’s property price indices (released over the weekend) and the German IFO reading for December (released overnight) were the only key events.
- A look back. As the year comes to an end, we take a look back at some of our hits and misses of 2016. We certainly had some of both in a difficult year to forecast equity markets. First, the year got off to one of the worst starts ever as oil prices collapsed. Then it was the unexpected outcome to the Brexit vote, which stocks largely shrugged off, followed by Trump’s upset, which was followed by one of the strongest post-election stock market rallies in history-outcomes few predicted. Among the hits, our stock market forecast and our decision to largely stay on the sidelines with regard to international equity markets. Misses included favoring large caps and growth.
- Can we count on Santa in 2016? Since 1950, the S&P 500 historically has been flat from December 1 through 15, then rallies nicely into year end. Last week, we took a look at this bullish time of year and the well-known Santa Claus Rally. But what happens during rare years like 2016, when the S&P 500 has already seen nice gains (2.9%) as of the mid-way point of the month? Going back to 1950¹, we found there were only seven other months that were up on December 15 at least 2.75%. The good news? The rest of the month the S&P 500 gained another 1.8% on average and was higher all seven times.
- Markit Services PMI (Dec)
- Yellen (Dove)
- Germany: Ifo (Dec)
- UK: PM Teresa May Makes a Statement on Brexit
- Japan: Bank of Japan Meeting (No Change Expected)
- Existing Home Sales (Nov)
- Leading Indicators (Nov)
- Durable Goods Orders and Shipments (Nov)
- Russia: President Putin Holds His Annual Press Conference in Moscow
- New Home Sales (Nov)
¹ The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1950 incorporates the performance of predecessor index, the S&P 90.
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