The US equity market
The US equity market had a tremendous performance in 2017. The S&P 500 Index (SPX-INDEX), the Dow Jones Industrial Average (DJIA-INDEX), and the NASDAQ Composite Index (COMP-INDEX) rose 19.5%, 24.8%, and 27.6%, respectively, in 2017.
US election and expectation for reforms
Donald Trump’s win in the 2016 US presidential election turned out to be bullish for the US equity market (SPY) (QQQ) in 2017. The expectation for tax reform, deregulation, higher infrastructure spending, and better economic conditions under the new administration drove the market sentiment in 2017.
On the other hand, the improvement in fundamental factors such as a stronger labor market, improvement in corporate earnings, stronger economic growth, rising inflation, and solid retail sales also supported the new highs in these indexes. Now, it’s important for investors to understand whether these strong performances will continue or disappear in 2018. In the next part of this series, we’ll analyze the 2018 outlook for the market.