Investors were preparing to close out a robust year of trading in the early going today that, barring any unforeseen incidents, looked like it would end with the biggest bang in at least two years.
After a tepid trading day Thursday, all three major benchmarks were on track to post solid advances on the month and some with double-digits gains on the year. The majority of Dow Jones Industrials’ (DJIA) stocks ended yesterday’s session to the upside but the index still slipped into negative territory. After a long string of up, up, up action, yesterday’s actions resulted in marginal losses for the second straight day.
Likely to have added a potential pinch of stress to the markets yesterday was the continued tension between the U.S. and Russia after President Obama expelled some 35 Russian diplomats who were thought to be tied to hacking that the administration believes may have had some impact on the presidential elections.
Russia’s foreign minister quickly retaliated, announcing plans to oust 35 American diplomats from Moscow. But, in what news organizations called a “head-spinning turn of events,” President Putin halted that, calling the U.S.’s “unfriendly” measures “provocative.” Even still, he said, there would be no expelling anyone.
The markets barely budged on today’s news, but here’s what investors may want to remember about these types of stories: They are rarely one-day headlines. And although the market reaction was relatively muted, geopolitical stories are often unpredictable.
As it stands in the early going, the DJIA is looking at about a 13% annual gain; the S&P 500 (SPX), led by financials and telecom, started the first quarter of the year off falling deeper than 11% but looks to end it higher by nearly 10%. The Nasdaq Composite (COMP), down 13% in the first quarter, is so far up about 8.5%.
On the docket for today that may nudge markets is the Chicago Purchasing Managers Index (PMI) report for December, which has a tough act to follow from November. That was when the index, known for its tight manufacturing ties and links to the auto industry, climbed to 57.6, its topmost reading in nearly two full years.
Why does this matter? As a bellwether of industrial activity, it may offer insight into next week’s Institute of Supply Management’s (ISM) Index, a key metric of national manufacturing activity that already is riding on three straight months of gains.
And, as the year in trading and investing nears its close, remember this: Get those positions where you want them. Tick, tick, tick.
Gold Gains; Dollar Doesn’t