US stock market posts gains in 2016

By Ovunc Kutlu

NEW YORK (AA) - Indexes in the U.S. stock market posted gains in 2016 as macroeconomic data came stronger in the second half of the year and Donald Trump got elected as president in November elections.

Between Jan. 4 and Dec. 28, the indexes in Wall Street increased from 10 to 16 percent, according to data compiled by Anadolu Agency.

Dow Jones Industrial Average rose from 17,148 points to 19,833 points during that period, posting a 15.6 percent increase.

Standard & Poor's 500 (S&P 500) Index increased from 2,012 points on Jan. 4 to 2,249 points on Dec. 28, gaining 11.8 percent.

The Nasdaq moved from 4,903 points to 5,438 points, rising 10.9 percent, during that period.

"The stock market is having a fairly positive year," Mark Kepner, managing director at equity agency and brokerage firm Themis Trading, told Anadolu Agency.

"We had slower growth at the beginning of the year, but it seems to be picking up now," Kepner added.

It was not easy for the indexes to post gains this year.

The historic decline in oil prices was coupled with worries over growth in Chinese economy at the beginning of 2016. The U.K.'s decision to leave the European Union, known as Brexit, in June also negatively affected the stock market and caused loses in the indexes.

Due to glut of supply and low global demand, oil prices fell from $115 a barrel in June 2014 to below $30 per barrel in January this year -- its lowest level since 2003.

Slowdown in Chinese economy, losses in Chinese stock market, devaluation of yuan by its Central Bank increased worries on January about the health of the world's second biggest economy and global markets, including the Wall Street.

"We had two significant sell-offs during the year. We had the sell-off last winter with China and the growth there, which led to a 10 percent decline. And, over the summer, we had the sell-off associated with Brexit, which led to a 5 percent decline," Kepner said.

Between Jan. 4 and Jan. 20, the Dow fell from 17,148 points to 15,450 points -- its lowest level in 2016 -- marking a 9.9 percent decline in the span of two weeks.

The S&P decreased from 2,012 points on Jan. 4 to 1,810 points on Feb. 11, having a 10 percent decline. The Nasdaq fell from 4,903 points to 4,209 points between the same days, losing 14 percent. Both indexes reached their lowest levels this year on Feb. 11.

It took the Dow and the S&P until March 10, and the Nasdaq until April 13, to recover from their previous losses.

The stock market fluctuated until the summer with weak macroeconomic data, such as the American economy growing only by 0.8 percent in the first quarter.

The next major decline during the year came with Brexit after June 23.

Between June 24 and June 27, the Dow, the S&P and the Nasdaq fell 5.2 percent, 5.8 percent and 6.8 percent, respectively. It took the indexes until July 8 to recover from their losses.

The Wall Street began to post gains in the second half of the year with positive macroeconomic data.

American economy grew 1.4 percent in the second quarter and 3.5 percent in the third quarter, unemployment rate fell below 5 percent, the economy added 287,000 jobs in June, 255,000 jobs in July and 178,000 jobs in November. And, the Federal Reserve did not make a rate hike until December.

"Last December, the Federal Reserve was targeting four interest rate increases for 2016, and that didn't happen ... The Fed delayed rate increases based on issues such as growth in China, and uncertainty created by the outcome of the Brexit voting," Kepner said.

The major increase in Wall Street, however, came after Republican candidate and businessman Donald Trump got elected as the U.S. president in the Nov. 8 elections.

"After the election, based on what is anticipated with more normalization of interest rates, stronger growth, lower taxes, deregulation; now, you have a run-up into the close of the year, based on the expectations of next year," Kepner said.

President-elect Donald Trump promised during his campaign to lower corporate taxes, create more jobs and spend more on infrastructure. These promises were viewed to stimulate economy and lead to higher growth by investors, who took a strong buying position after the election.

As a result, the Dow rose from 18,317 points on Nov. 9 to its all-time record-high level on Dec. 20 by reaching 19,987 points, marking a 9.1 percent jump.

The S&P increased from 2,131 points on Nov. 9 to 2,277 points on Dec. 13, reaching its own all-time highest level and posting a 6.8 percent rise.

The Nasdaq moved from 5,143 points on Nov. 9 to its all-time highest level of 5,512 points on Dec. 27, posting a 7.2 percent increase during the process.

Performance of the stock market will depend on the Trump administration to fulfill its economic policies.

"There is a big anticipation of stronger growth, lower taxes, and infrastructure spending and deregulation -- that's what the expectation is," Kepner said.

"If it doesn't happen as quickly as anticipated, then you can actually see a sell-off and you can see the gains we had from November disappear," he said.

"However, if the new administration will be able to work things out with the Congress, and we get what is being expected, then we will take a look at earnings and economic numbers, and see if everything has been justified and maybe even higher," he added.