the stock market should have carried a warning in 2016: sharp drops and sudden acceleration can cause whiplash.
From the drop in oil prices that fueled the worst start to the year in wall street history to unpredictable political events like brexit and the election of donald trump, the year in stocks was not for the faint of heart .
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Those who stuck it out were handsomely rewarded: The resilient Dow closed 2016 more than 4,300 points above its January low of 15,451. A post-election surge, built around Trump’s stimulus promises, has brought the drop to almost 20,000 for the first time.
Reading: How did the stock market do in 2016
in the end, all three major indices posted healthy gains in 2016. downside rose 13.4%; the s&p gained 9.5%; and the nasdaq rose 7.5%. That’s not bad considering that both the Dow and S&P 500 suffered slight losses in 2015.
“This year we saw more change of heart than we’ve experienced in a long time. The problem was that a lot of things didn’t follow the script,” said Michael Block, chief market strategist at Rhino Trading Partners. .
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the bull market in the us. stock is on track to turn eight years old in March. The S&P 500 has more than tripled since President Obama’s inauguration in 2009 due to the economic recovery from the Great Recession and extremely low Federal Reserve interest rates.
But 2016 started out terrifying. The Dow sank 1,079 points in the first week on concerns about China’s economic slowdown and falling oil prices. The 6% selloff was the Dow’s worst five-day start in a year on record.
Related: Trade war is trump’s biggest fear on wall street
The panic ended. By mid-March, the Dow was up for the year, and the bull market was back on track.
then came the political blows. First was the unexpected decision of British voters to leave the European Union. brexit sent sterling crashing and sent the dow into a downward spiral of 611 points in a single day.
united states stocks stabilized and advanced towards the November elections. Dow futures fell more than 900 points on election night as it became clear that Clinton would unexpectedly lose. That reaction seemed to confirm predictions that a Trump victory would cause the stock market to crash.
but the liquidation of trump was fleeting. Wall Street welcomed Trump with a bang, rising 257 points the day after his victory.
Optimism about his promises to cut taxes, reverse regulation and unleash infrastructure spending has pushed the DoW up nearly 1,500 points since the election.
“I would have thought you were crazy,” Block said, “if you had told me that Trump’s election would be greeted with a five-hour sell-off, followed by a six-week rally.”
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but is trump’s euphoria exaggerated? Some, including even Trump adviser and activist investor Carl Icahn, argue that the rally has gotten out of hand and it may be time to take a breather.
after all, trump is not yet in office and there is no guarantee that his stimulus proposals will be enacted or will be effective.
others fear that trump’s anti-trade campaign rhetoric will turn into protectionist policies and trigger a destabilizing trade war.
“The US stock market has moved quite a bit, quite quickly,” said Chris Zaccarelli, chief investment officer at Cornerstone Financial Partners.
“Fundamentals need to catch up with expectations,” he said.
-hether from cnnmoney was a long time contributor to this report.