After a brief pullback last week, the S&P 500 started this week on a stronger note and rose to record high price levels. Carrying forward the strength, the S&P 500 opened stronger on Wednesday and rose to all-time high price levels. On January 3, eight out of the S&P 500’s 11 major sectors closed the day in profits. Strength in the energy and IT sectors pushed the market higher. Weakness in the utilities and telecom services sectors limited the market gains.
The market sentiment is strong this week amid supporting economic data and the improved economic outlook amid the tax cut bill. According to the ISM (Institute for Supply Management), the U.S. ISM manufacturing purchasing managers’ index rose in December to 59.7, which was higher than the forecast of 58.1. Strong manufacturing data boosted the market. The FOMC’s meeting minutes also added strength to the market. According to the Fed’s December meeting minutes, the introduction of tax cut plans improved the economic forecast. The market is looking forward to the release of the US ADP non-farm employment change and initial jobless claims data in the early hours on January 4.
The CBOE Volatility Index (or VIX) measures uncertainty in the market. It fell 6.4% to 9.15 on Wednesday. The index is measured on a scale of one to 100 with 20 as the historical average. The VIX is also called the “fear index.” Usually, it has an inverse relationship with stocks and rises when the S&P 500 falls.
NASDAQ and Dow
Amid strength in the IT sector, the tech-heavy NASDAQ Composite Index rose to fresh record high levels on Wednesday. The NASDAQ Composite rose 0.84% on January 3 and closed the day at 7,065.53. The Dow Jones Industrial Average closed the day at 24,922.68—a gain of 0.4%.
In the next part, we’ll discuss the S&P 500’s top gainers on January 3.