A selloff in the final trading minutes of the year pushed stocks into the red for the shortened holiday week. Technology stocks lagged for the week, led by Apple after some analysts suggested demand for the iPhone X was lower than expected and there was backlash against throttling performance of older phones. The market’s muted reaction in the first full week of trading after the passage of the tax bill suggests most of the benefits were widely expected and are likely already baked into prices.

Weekly Returns

S&P 500: 2,674 (-0.3%)
FTSE All-World ex-US: (+0.6%)
US 10 Year Treasury Yield: 2.41% (-0.07%)
Gold: $1,303 (+2.2%)
EUR/USD: $1.120 (+1.2%)

Major Events

Our Take

2017 was an interesting year. The news was dominated by disturbing headlines including severe natural disasters, mass shootings, and threats of nuclear war. Meanwhile, a heightened sense of division blanketed the country. Capital markets didn’t care. The S&P 500 rose over 21%, including dividends. While this marks just the 31st best year since 1926, the tranquility was truly special. The S&P 500 moved by more than 1% on just 8 days in 2017, compared to 27% of all days over the last 10 years. There were no 2% moves and the biggest peak to trough decline was just 3%.

For those invested in a strategic long-term allocation, this was rewarding and stress-free. We don’t see any immediate catalyst for what would cause volatility to rise to more normal levels, but we suggest investors be ready for it to happen eventually. 2017 was also a good year for many stock-pickers. The trendiest names, such as Apple, Amazon, Facebook, Netflix and Tesla were all up around 50%. This makes the new year a great time to revisit allocations and ensure your strategy fits your long term goals and risk tolerance. Historically, most stock pickers and market timers don’t fare well over full market cycles and sector rotation can happen quickly and intensely.