U.S. stocks finished the final trading session of 2017 lower, capping off a year that delivered a global rally on broad-based economic growth and strong earnings.
Treasury yields dipped in an abbreviated session and the U.S. dollar remained under pressure. Crude oil prices extended a rally and gold was higher.
The Dow Jones Industrial Average (DJIA) declined 118 points (0.5%) to 24,719
The S&P 500 Index was 14 points (0.5%) lower at 2,674
The Nasdaq Composite decreased 47 points (0.7%) to 6,903
In light volume, 704 million shares were traded on the NYSE and 1.5 billion shares changed hands on the Nasdaq
WTI crude oil increased $0.31 to $60.15 per barrel and wholesale gasoline gained $0.01 to $1.80 per gallon
The Bloomberg gold spot price moved $8.29 higher to $1,303.33 per ounce
The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.4% lower at 92.27
Markets were lower for the week, as the DJIA decreased 0.1%, the S&P 500 Index was 0.4% lower and the Nasdaq Composite declined 0.8%
Treasury yields dip and U.S. dollar continued to decline
Treasuries traded higher, with the economic calendar void of any major releases. The yields on the 2-year and 10-year notes, along with the 30-year bond, declined 2 basis points to 1.89%, 2.41% and 2.74%, respectively.
Treasury yields slipped as the curve flattened a bit this week, while the U.S. dollar extended its drop in the abbreviated final week of the year that was light on volume and data. The stock markets were lower on the week, but closed out 2017 with a strong rally that was fueled by broad global economic growth and strong corporate earnings, as well as the lead up to last week’s passage of the Tax Cuts and Jobs Act.
Although abbreviated, the first week of 2018 will deliver a flood of key economic reports, with the ISM Manufacturing Index and non-Manufacturing Index being accompanied by the minutes from the Fed’s December policy meeting, monthly auto sales, trade balance and factory orders. However, the week will culminate with the release of the December non-farm payroll report.
We anticipate solid growth in 2018 and don’t see a recession on the horizon. However, with markets priced for ongoing moderate growth and low volatility, the risks we’re monitoring include the potential for higher inflation and more central bank tightening than expected. Thoughts Heading into ’18, pointing out that 2017 was a remarkable year marked by record low volatility and the ongoing strong bull run for the tech sector. In our view, a repeat of 2017 is unlikely, and we’re expecting more sector changes in 2018 than there were in 2017.
Please note: All U.S. markets will be closed on Monday due to the New Year holiday.
Europe limps to 2017 finish line, while Asia closes out a strong year in quiet fashion
European equities finished mostly lower, with the euro moving higher as the U.S. dollar continued to see pressure, though volume remained muted in the final trading session of 2017 and as some markets closed early today. U.K. stocks traded higher despite some noticeable strength in the British pound, bolstered by the extended rally in the mining sector, which helped the index hit a fresh record high. Bond yields in the region were mostly higher after German consumer price inflation data came in a bit hotter than expected for this month. Italian stocks led to the downside amid some political uncertainty as the country’s president dissolved parliament and called for an election for March 4, 2018. European stocks have participated in the global rally of 2017, highlighted by double-digit gains in Germany, Italy and Switzerland.
Stocks in Asia finished mixed in light volume in the final trading session of 2017, with South Korean markets closed. Japanese equities dipped as the yen continued to move higher with the pressure on the U.S. dollar persisting. Shares trading in mainland China and Hong Kong advanced on the heels of some stronger-than-expected Hong Kong trade data reported late yesterday. Australian securities retreated despite the extended advance in materials stocks, while Indian stocks snapped a two-day losing streak. The strong rally in Asia this year was highlighted by a near 36% surge in Hong Kong’s Hang Seng Index and an approximate 28% jump for India’s BSE Sensex 30 Index, while Japan’s Nikkei 225 Index posted a decisive 19% gain.