The final trading day — What you need to know in markets on Friday

Myles Udland
Markets Reporter

Friday is the final trading day of 2017.

And what a year it has been.

The earnings calendar will bring investors no action to end the year and an empty economic calendar. And with volume on Thursday coming in at about a third of the average day over the last few months, Friday should be a very quiet day on the Street.

As the year comes to a close, investors in the U.S. are currently looking at gains of right at 20% for the benchmark S&P 500, over 25% for the Dow, and 29% for the tech-heavy Nasdaq. All in, this will be the strongest year for U.S. stocks since 2013.

During a year in which tax reform hopes, a lack of volatility, and a year-end bitcoin craze were the defining features of the market, stocks went up all but one month and there were just eight trading days wherein the S&P 500 moved more than 1%. This was the fewest since 1965, according to Bespoke Investment Group.

2017 has been one of the least-volatile years for the U.S. stock market since World War II. (Source: Bespoke Investment Group)

For investors, then, 2017 will be a year to remember and Wall Street analysts are calling for another strong year in 2018. But as the old axiom goes, past performance is not a guarantee of future returns.

Chicago is a city of bulls right now

Economic activity in the Midwest is booming.

On Thursday, the Chicago business barometer from the Institute for Supply Management came in at a reading of 67.6, topping expectations and best reading for the index since March 2011.

For the fourth quarter of the year, the index hit 65.9, the best quarterly performance since the first quarter of 2011 and just the third time in the reading’s history there has been a three-month stretch with readings over 60.

Any reading above 50 indicates expansion in business activity in the Midwest.

Perhaps the most standout part of the report was the production measure, which hit a 34-year high, while new orders also rose though employment moderated. Neil Dutta, an economist at Renaissance Macro, said Thursday that, “the strong growth in production relative to employment indicates faster productivity growth.”

Economic indicators from the Midwest point to improving productivity in 2018, according to Neil Dutta at Renaissance Macro. (Source: Renaissance Macro)

Productivity growth has been sluggish since the financial crisis and many economists see lagging productivity as a factor holding back wage gains despite the 17-year low in unemployment.

“Sentiment among businesses started 2017 in good shape and only impressed more as the year progressed,” said Jamie Satchi, economist at MNI Indicators.

Satchi added that, “December’s result secured the MNI Chicago Business Barometer’s first full year of expansion since 2014 and with new orders ending the quarter in fine shape there is every chance this form could be carried over into 2018.”

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

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