The S&P 500, an index of large U.S. companies, posted a total return of 3.8% for the 13-weeks and 12.0% for the full year ending December 31, 2016. U.S. stocks outpaced International for the quarter as measured by the All Country World Index ex-U.S. stocks, a representation of international stocks outside the U.S. Total return for the 13 weeks ending December 31, 2016 was -1.3% and year to date 4.5%.<\/p>\n
U.S. stocks outpaced international by a strong margin in the latest quarter, as the election of Donald Trump signaled a strong U.S. nationalist shift in political leadership. Investor expectations are for policies that intend to benefit U.S. companies and potentially penalize non-U.S.<\/p>\n
Japanese stocks were the lone positive standout, with the Nikkei 225 Average Index up 16.2% in the fourth quarter. Despite strong fourth quarter performance the Nikkei returned a small<\/p>\n
0.4% for the full year.\u00a0 Prime Minister Shinzo Abe announced a 13.5 trillion yen fiscal measure on August 2, 2016, including cash payouts to low-income earners and infrastructure spending.\u00a0 Growth remains very low for Japan despite ongoing stimulus efforts.<\/p>\n
Top performing U.S. sectors for 13 weeks ending December 31, 2016, by total return included Financial Services (+19.0%), Energy (+7.3%) and Industrials (+7.1%).\u00a0 Laggards for the 13-weeks included Healthcare (-4.2%), Real Estate (-2.7%) and Consumer Defensives (-1.2%). Political interests played a large part in sector performance for the fourth quarter. Healthcare companies came under pressure as uncertainty regarding the future of the Affordable Care Act increased.<\/p>\n
For the full year 2016, the top performing sectors included Energy (+27.9%), Communication Services (+20.8%) and Financial Services (+20.7%). Underperforming sectors included Healthcare (-3.4%), Consumer Cyclical (+5.8%) and Consumer Defensive (+7.0%). Recovering oil prices and prospects for pro-business political initiatives drove strong sectors.<\/p>\n
Political initiatives in the first six months of 2017 will affect sector performance. Based on estimates gathered from FactSet, earnings growth expectations remain solid for many S&P 500 companies.\u00a0 Utilities and financial services companies are expecting solid fourth quarter earnings growth of \u00a0over 10%.\u00a0 Telecom services expectations are weak, with earnings growth expectations of -28%.<\/p>\n
Stock prices are at high values as measured by the trailing 12-month P\/E.\u00a0 As of January 5, 2016 the S&P 500 P\/E ratio is 20.7x, a level not seen since 2009 and significantly higher than the 5 year average of 16.5x. See chart below.<\/p>\n","protected":false},"excerpt":{"rendered":"
U.S. Versus International The S&P 500, an index of large U.S. companies, posted a total return of 3.8% for the 13-weeks and 12.0% for the full year ending December 31, 2016. U.S. stocks outpaced International for the quarter as measured by the All Country World Index ex-U.S. stocks, a representation of international stocks outside the […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[119,123,1],"tags":[],"class_list":["post-6159","post","type-post","status-publish","format-standard","hentry","category-market-commentary","category-market-performance","category-uncategorized"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p7kXxe-1Bl","jetpack-related-posts":[{"id":6182,"url":"https:\/\/schenkelberg.investments\/?p=6182","url_meta":{"origin":6159,"position":0},"title":"Market Performance Breakdown – Fourth Quarter 2017","author":"J.J. 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