Friday, January 1, 2016

Wall Street suffers feeble end to turbulent 2015

Wall Street dropped on Thursday, leaving the S&P 500 marginally lower for a year marked by record highs as well as a major sell-off.

In a reversal of one of 2015’s major trends, oil shares moved higher, with the S&P energy sector up 0.34 per cent and alone among gainers.

Much of the blame for this year’s underwhelming stock market performance can be laid at the feet of crude oil prices, which lost a third of their value during an unprecedented global glut. The energy sector fell 24 per cent, its worst annual performance since the global recession.

The S&P 500 hit a record high in May only to slump 11 per cent over eight days in August over fears of a China-led global economic slowdown. The CBOE Volatility index spiked to a seven-year high before the market recovered.

On the last trading day of 2015, the S&P 500 fell 0.94 per cent to 2,043.94 points, leaving it with a total loss of 0.71 per cent for the year. The S&P’s total return, including dividends, was about 1.4 per cent, according to preliminary data.

“If you went to sleep on December 31, 2014, and woke up today, you’d say what a dull year it’s been, and yet in between we’ve had these wild swings,’’ said Donald Selkin, chief market strategist at National Securities in New York.

“The lesson is that people should watch the extremes. On those big down days, hold your nose and buy - and don’t be afraid.’’

The Dow Jones industrial average lost 2.23 per cent for the year, its first annual decline since 2008. The Nasdaq Composite gained 5.73 per cent after surpassing the levels not seen since the dot-com bubble in 2000.

Eight of the 10 worst performers on the S&P this year were energy companies, led by Chesapeake Energy’s 77-per cent slump.

The consumer discretionary sector, on the other hand, was the S&P’s best performer, rising 8.43 per cent thanks to Netflix’s 134-per cent increase and Amazon’s 118-per cent surge.

Consumer stocks also took the top three spots on the Dow, led by Nike’s 30-per cent increase in 2015.

Good riddance!

With much of the day’s losses suffered in the last few minutes of trade, the Dow Jones industrial average fell 1.02 per cent to end at 17,425.03. The Nasdaq Composite lost 1.15 per cent to 5,007.41.

Nine of the 10 major S&P sectors fell Thursday, led by a 1.43-per cent fall in the technology sector.

Many of the risks that worried investors this year will remain front and centre in 2016.

“Elevated valuations, modest earnings growth and muted economic activity. Of course, there is the additional variable of rising interest rates,’’ said David Joy, chief market strategist at Ameriprise Financial in Boston.

Apple dropped 1.92 per cent and was the biggest drag on all three indexes. Its stock has been pressured by concerns about potentially weak iPhone sales and ended the year down 4.5 per cent, its first annual loss since 2008.

“Apple is caught between being a growth stock and being a value stock and it’s caught in the abyss,’’ said John Augustine, chief investment officer at Huntington Wealth & Investment Management.

Investors next week will watch for a potential “January effect,’’ when stocks that were sold in December for year-end tax purposes bounce back.

Volume on US exchanges was 5.3 billion shares, below the 7.2 billion average over the last 20 trading days, according to Thomson Reuters data.

Advancing issues outnumbered decliners on the NYSE by 1,882 to 1,163. On the Nasdaq, 1,869 issues fell and 1,022 advanced.

The S&P 500 index showed one new 52-week highs and two new lows, while the Nasdaq recorded 32 new highs and 72 new lows.

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