MARKET-ALERT – Rumblings Up, Down, and Around Wall Street – Issue *460 dated January 2, 2018 – with Ray Dirks of RAYSEARCH plus his team of securities analysts and money managers.
‘Twas another exciting week on Wall Street in the U.S., as the week ending before Christmas saw some nice upward moves in Rumblings’ Ten Favorite Stocks for 2017 – with Fusion (FSNN) leading the way – up 18% for the week.
Let’s take a look at “The Trader” column in Barron’s, The Dow Jones Financial and Business Weekly, where the headline reads: “Markets Take a Holiday Ahead of the Holidays”. The column begins: Christmas doesn’t begin until Monday, but last week already felt as if everyone had gone on vacation.
It wasn’t as if there were no news to get the market moving. We learned last Friday that new-home sales had surged in November, and that consumers are spending more and saving less. Congress passed its tax bill, which was then signed by President Donald Trump, and it also agreed on a stop-gap budget measure to keep the government funded through the middle of January.
Who could ask for anything more?
The market, it seems. The Dow Jones Industrial Average gained 102.32 points, or 0.4%, to 24,754 last week, while the Standard & Poor’s 500 index advanced 0.3%, to 2,683, and the Nasdaq Composite rose 0.3%, to 6.960. It was something of a yawn, and trading even reflected it: Friday’s volume was the lowest for a full day this year.
Most of the easy money has already been made in the tax trade. When it became clear in mid-November that getting tax cuts passed by Christmas had become a real possibility, the S&P 500 rallied 4.6%. Stocks set to get a big earnings boost outperformed the overall market. “Much – but not all – of the tax-related benefits to earnings are likely reflected in earnings already,” explains Credit Suisse strategist Jonathan Golub. He isn’t worried, however, because he believes earnings growth and higher valuations can push the S&P 500 up to his year-end target of 3,000.
As Rumblings has been saying for a long time, investors should consider switching their fixed-income holdings into U.S. common stocks.
And we think investors should place no more than 1% of their investable funds in the securities of any one corporation. It pays to diversify…!