Friday, December 30, 2016

Wall Street will enter 2017 with a bit of nervousness –

NEW YORK – Wall Street may it begin in 2017 on the momentum of the outbreak, who comes to bring the Dow Jones to the edge of the 20,000 points ? After two weeks of quiet for the holidays, the serious things start again, and investors lack certainty.

Since last weekend, the index featured Dow Jones Industrial Average lost 0.86% to 19.762,60 points and the Nasdaq, to dominant technological, 1,46% to 5.383,12 points. The expanded index S&P 500 fell 1.10% to 2.238,83 points.

“As usual at the end of the year, the exchanges have shifted down, (…) as much as the Stock market has mounted a lot this year,” summarized Peter Cardillo, chief economist at First Standard Financial.

The decline in weekly Wall Street, which is done on a four-day week after a bank holiday Monday the day after Christmas, does not take away much to its annual performance: in 2016, the Dow has gained 13,42%, its largest increase since 2013, the Nasdaq 7,50% and the S&P 500 9,54%.

Even if the next week will also be severed from the remainder of its session Monday, this time for the next day of the new year, it may prove to be more significant, as many investors are gradually making their return out of the holiday season.

The immediate future is really uncertain,” admitted Michael James, of Wedbush Securities.

If Wall Street seems shaky to some observers, is that the bulk of its excellent performance has been achieved during the last two months after the election in early November of the republican Donald Trump to the president of the u.s., even as the blur continues to reign over the economic program of the future head of State.

“investors are cautious,” reported Mr. James, believing that this caution took hold particularly in the face of the repeated failure of the Dow Jones to surpass the 20,000 points for the first time in its history.

“They remember what happened at the beginning of the year: the Exchange had finished 2015 in a satisfactory way, then started 2016 catastrophically !”, he explained.

- Hopes and reality -

The indexes had fallen up to mid-February, against a backdrop of collapsing oil prices and worries over the chinese economy at a time when the authorities appeared to be ready to devalue the yuan aggressively.

“The fluctuations of the yuan and the developments in China are emerging as a topic of major interest in 2017″, has warned, in a note to Patrick O’hare of Briefing.

As for the “black gold”, the courses have significantly picked up after the announcement of agreements of reduction in production within the Organization of the petroleum exporting countries (Opec) and other countries, but, here again, uncertainties prevail on the good will of the participants to implement the agreements from the 1st of January.

however, we will have to wait beyond next week to draw the first conclusions, as to the presidency, Trump, who will start on January 20.

For the time being, “that which dominates the minds of investors, ( … ), that is, if some companies will issue warnings on results,” said Mr James.

As the quarter ends that Sunday, the full results will be published only next week, including big names in the banking sector, but some groups could already start to prepare the minds if their numbers are this bad.

“It is the great unknown and we will have to spend the week in order to see more clearly,” said Mr James.

As for the macro-economic statistics, the large piece will also wait a whole week, with the publication on Friday of figures monthly u.s. employment.

For the time being, “investors are in retreat and are waiting to see if the reality of 2017 is on the high hopes of growth to the end of 2016,” concluded Mr. O’hare.


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