2016 ended with a presidential election that surprised many. Traders entered 2017 with high hopes about the country’s new administration, which ran a campaign that emphasized business-friendly policy reform. As a provider of one of the best stock trading platforms in the industry, Lightspeed closely followed the developments that took place during the past year of historically low volatility.
Since 2016, the U.S. unemployment rate has fallen by nearly 13%. Meanwhile, the total value of commercial bank loans in the county has risen by almost 50%. Both the Russell 1000 Growth Index and the NASDAQ Composite sit at record highs. These statistics are consistent with the high levels of confidence and optimism exhibited by traders throughout the year. Although Trump’s administration did not perform as consistently as some may have hoped, low volatility and a growing global economy combined to validate many traders’ expectations of a relatively stable bull market. As for 2018, however, it’s unclear what the full impact of tax reform will be.
In the first quarter, traders’ optimism about the new administration persisted, even though Congress primarily focused on healthcare reform. This hopefulness drove bank stock prices higher while businesses began to invest in growth. Further, traders’ confidence resulted in the S&P 500 trading at almost 19 times earnings — that’s three turns higher than the earnings we saw in 2016. In general, traders became much less risk-averse.
During the second quarter, optimism faltered. Analysts observed that the hard data did not seem to match the enthusiasm that so many investors had expressed. However, developments like the French elections eased political risk in Europe and served as one of the first signs of a growing global economy. Around this time, people noted that 2017 was shaping up to be a year of low volatility.
During late summer, traders’ confidence in the market appeared to be well-founded, but perhaps for different reasons than expected. Instead of business-friendly policies emerging from the White House, synchronized global economic expansion seemed to be responsible for the apparent boom. However, analysts warned that cycles go both ways.
Finally, in the last quarter of the year, investors continued to pursue rising markets, disregarding risks and ignoring inflationary pressures. Consumption increased as the global economy continued to grow in what appeared to be a stable fashion. The industry anxiously awaited news from Washington about tax reform, unsure of the potential ramifications.
“As the market grew and evolved in 2017, so did our business,” said Kevin Ott, Co-President of Lightspeed. “We’re grateful to all the people that contributed to our success. With that said, we look forward to the challenges and opportunities to come in 2018.”
As the bull market lingers, the industry can only speculate about the effects of tax reform. In the meantime, Lightspeed continues to offer low-cost trading. To learn more about our trading tools, call us at 1.888.577.3123 or try a demo today.
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