There was a lot to dislike about 2016—multiple mass shootings around the world, a divisive and at times vicious presidential election here in the U.S., the premature loss of global icons like Prince, David Bowie and Muhammad Ali. But if you’re an investor, it was hard not to like the stock market results.
I say “results” because the year-end result in the stock market was good, but there was a whole lot of volatility along the way—particularly in January and February, and right after the surprise Brexit vote. But a huge post-election rally—many are calling it the Trump Rally—saved the market’s bacon. Until then, it was looking like another year of malaise on Wall Street. What a difference two months makes.
As always, some sectors and markets performed better than others. So, to get the full scope of how stocks fared last year, the following is a comprehensive breakdown of 2016 stock market results both here and abroad:
S&P 500: +9.5%
Dow Jones Industrial Average: +13.4%
Small cap stocks (as measured by S&P Small-cap 600): +24.7%
Energy stocks: +23.7% (best of any sector)
Healthcare stocks: -4.4% (worst of any sector)
Nvidia (NVDA): +223.8% (best among S&P 500 stocks)
Endo International (ENDP): -73.1% (worst among S&P 500 stocks)
Global stock market: +5.7%
Emerging markets stocks: +8.7%
Venezuela stocks (as measured by the Caracas General): +116.8% (tops among all markets)
Chinese stocks (as measured by Shanghai Composite): -12.3%
Nikkei 300: -2.3%
Stoxx Europe 600: +1.8%
As you can see, there were huge disparities in 2016 stock market results depending on sector, market cap and country.
Here in the U.S., small cap stocks outperformed large cap stocks by a wide margin, investors gobbled up energy stocks as oil prices rebounded and sold off healthcare stocks in advance of a potential Obamacare repeal, and NVDA was the only large-cap stock to more than triple.
Elsewhere, emerging markets outperformed developed markets, rising roughly in line with U.S. stocks. Chinese stocks had a bad year, markets in Japan and Europe were sluggish, and no market posted a better return than Venezuela’s.
With U.S. stocks opening the new year near all-time highs, it will be interesting to see where stocks go from here. Value investing experts like our own Roy Ward insist stocks have become overvalued and are due for a pullback. Growth investors like our Mike Cintolo believe we’re in the early stages of a new bull market after more than a decade of little net gain. Who wins the growth-versus-value tug-of-war in 2017 could depend on things like oil prices, interest rates, continued improvement in corporate earnings and U.S. GDP growth, and, perhaps above all, Year One of the Trump administration.
Globally, Russia (52%) should continue to lead the way among emerging markets with Trump in office, while stocks in China, Japan, Portugal and Italy could use a rebound over the next 12 months.
But as 2016’s stock market results reveal, don’t get too caught up in the daily or even weekly fluctuations in the market. Last January and February, many investors thought the sky was falling and an extended bear market was underway. Nine months later, U.S. stocks were at all-time highs with volatility at a minimum.
A lot can change in a year. So, in 2017, it’s important to maintain an even keel: don’t get too overconfident and careless in your investing if stocks continue to roll, and don’t panic if stocks pull back a bit from record highs. As we saw in 2016, the tide can turn quickly on Wall Street. Just be aware of it before the water’s up to your neck.