By Philip van Doorn, MarketWatch
One might have thought the stage was set for another excellent year for U.S. stocks after President Trump signed the legislation that reduced the federal corporate income-tax rate to 21% from 35% in December. But you might not have expected the market to move so dramatically.
Netflix is far and away the early leader in the S&P 500’s /zigman2/quotes/210599714/realtime SPX -1.04% broad rally this year. The index has returned 6.3% during the first 17 trading sessions of 2018, through Jan. 25, with dividends reinvested, adding to its remarkable return of 21.8% in 2017. (The S&P 500 actually comprises 505 stocks, because several companies have more than one class of common shares included in the index.)
The index has closed at a record 13 times this month, the most records for any calendar month since February 1998.
And it may be time to put some perspective on every time the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.38% rises by another 1,000 points. After all, a 1,000-point gain from its last milestone of 26,000 on Jan. 17 would be gain of 4%. That’s lovely, but not dramatic. The Dow is up 6.9% this year (and has set 10 record closes), following last year’s return of 21.8%.
Among the S&P’s 505 components:
• 117 have had double-digit total returns.
• 232 have beaten the market with total returns of 6.4% or more.
• 408 have shown positive returns.
• One is flat. That would be Celgene Corp. , which reported better-than-expected fourth-quarter results on Jan. 25 after announcing on Jan. 22 an agreement to acquire Juno Therapeutics Inc. for $9 billion.
• 96 are down.
• 35 are down 5% or more, including five that are down 10% or more.
For 2018, many professional investors expect a healthy environment for the energy sector, because of strong demand for oil brought about by accelerating growth in all major world economies. West Texas Intermediate crude oil /zigman2/quotes/211629951/delayed CL.1 +0.91% has risen 8% this year, to $65.51 a barrel as of the close on Jan. 24.
Jim Brilliant, who manages the CM Advisors Fixed Income Fund /zigman2/quotes/206487783/realtime CMFIX -0.10% said in an interview that simultaneous economic growth around the world will signal a “rotation” for stocks away from higher-growth industries into value plays in the industrial, energy and materials sectors.