The first half of 2017 was the strongest U.S. markets that we have seen in years.
The Dow Jones Industrials and S&P 500 each gained 8% since the year began. The Russell 2000 tacked on 5%. But it was the tech-heavy NASDAQ that gained the most, adding 14% of upside since January 3, 2017. It was the strongest first half for the NASDAQ since 2009.
Thanks mostly to expectations that the Trump Administration would deliver sweeping changes on corporate taxes and infrastructure spending. Stocks have also soared in response to record second quarter earnings by a number of corporations. .
Construction stocks roared higher on the mention of a potential $1 trillion infrastructure plan. Vulcan Materials (VMC) ran from a low of $111 to $135. U.S. Concrete (USCR) exploded from a low of $57.50 to $80.
Financial stocks skyrocketed on a potential rollback of excessively stringent financial regulations.
The Financial Select Sector SPDR (XLF), for example, ran from $23 to $25, on the heels of impressive gains on Bank of America (BAC) and Wells Fargo (WFC).
Cyber security stocks ran on the announcement of a new executive order from Donald Trump and the latest ransomware attack. Palo Alto Networks (PANW) shot from $107 to $141. Fire Eye (FEYE) popped from $10 to $16.50.
Even the biotech sector exploded higher.
In fact, the iShares NASDAQ Biotech ETF (IBB) shot from a low of $290 to $323. The SPDR S&P Biotech ETF (XBI) jumped from $70 to nearly $81. The Pro Shares Ultra NASDAQ Biotech (BIB) ran from a recent low of $47 to a high of $58.
Small cap stocks are having another incredible year, too. As we noted yesterday:
Analysts argue that small cap stocks should perform better in the current market environment of rising interest rates and on a higher potential for increased market volatility, given geopolitical risks, such as issues with North Korea, the Middle East, and elections.
Geopolitical risks have little effect because most small cap stocks generate their revenues from the U.S. domestic market, which has shown solid signs of strength in recent months. Most have no ties to international markets so the strength of the US dollar versus other currencies doesn’t impact them.
The market has had a great first half, but not all stocks benefitted from the market surge. The telecom and energy sectors haven’t done so well.
In fact, the S&P 500 telecommunications sector is down nearly 13% on the year, led by big declines in AT&T (T) and Verizon (VZ), which just fell from a high of $53 to $43.90.
Even the energy sector was dragged lower, as oil fell from a 2017 high of $54 to $42. Exxon Mobil (XOM) fell from $89 to $80. Chevron (CVX) fell from $116 to $104.
With the indexes setting new records, these are exciting times to be an investor.