Can the Dow Jones (DJIA) Go Any Higher in 2017?
The Dow Jones Industrial Average (DJIA) was phenomenal in 2016.
The majority of analysts did not expect the DJIA to cross 19,000 after the Donald Trump presidential win, but it did exactly that. The Dow Jones today is at a level not expected a few months back. It would be a landmark moment if the index crosses that level and closes at 20,000, but will it be possible? Will the Trump rally fizzle out, or will it continue well into 2017?
The Dow Jones 2016 numbers show that it was the best year for the index since 2013. Sentiments had turned bullish, and investors were hopeful that there will be lower taxes, increased investments in infrastructure, and higher economic growth in the United States in 2017.
The DJIA gained over 13% in 2016, a year that was beset with shocks like Brexit and the unexpected win of Donald Trump in the U.S. presidential election. The S&P 500 added 9.5% in 2016, and the NASDAQ Composite index went up by 7.5% and clocked the biggest gain since 2014.
However, the stocks took a breather on the last trading session of the year and ended in the red. The DJIA fell 0.3% last Friday and closed at 19,762.60. Still, the Dow Jones today is in a stronger position than it was at the start of 2016.
The best performers in the Dow Jones in 2016 were Goldman Sachs Group Inc (NYSE:GS), which rose 0.53%, and JPMorgan Chase & Co. (NYSE:JPM), which gained 0.47%.
The biggest losers in 2016 were Microsoft Corporation (NASDAQ:MSFT), which fell 1.2%, and Intel Corporation (NASDAQ:INTC), which declined by 1.06%.
The S&P 500 Index fell 0.46% and closed at 2,238.83 in 2016.
The NASDAQ lost 0.90% in 2016, closing at 5,383.12. NVIDIA Corporation (NASDAQ:NVDA), which posted the best gains in 2016, of over 220%, ended the last session with heavy losses, going down by over four percent.
The second half of 2016 saw earnings improve and boosted the Dow Jones. The economic indicators also came in better than expected, and the positive sentiments helped the DJIA close on November 22 above 19,000 for the first time.
As investors look forward to the rest of 2017, there is caution in the air. President-elect Donald Trump’s promises may not materialize, and may have unintended consequences. The economic climate may improve, but the political climate may deteriorate, as Trump has been quite vocal in his criticism of certain policies of China. This is unlikely to have a positive impact on the markets.
In 2016, the month of January had witnessed a sell-off. And now that the market has run up quite a bit, investors may want to take profits. Hence, the Dow Jones now is in a wait-and-watch situation. Until more clarity emerges on Trump’s economic policies, the Dow Jones is likely to hover below the 20,000 mark.