January 3, 2018 Market Outlook

Nasdaq Closes at 7,000 for the First Time

Wall Street had a buoyant start on Tuesday and it appears the bullish sentiment in 2017 that drove the market to several records is still present. U.S. stocks rose in the first trading session of 2018 with the Nasdaq closing at 7,006.90, its first-ever close above 7,000. The S&P 500 also scored a fresh record to end at 2,695.79 while the Dow Jones was just 13 points below its all-time record at 24,824.01.

Apart from the technology sector, S&P consumer discretionary, healthcare, energy and materials indexes were all up more than 1% on January 2. Many investors say the momentum from last year could continue. The recently approved U.S. tax overhaul is anticipated to boost not only but the economy as well.

Chipmakers Advance On First Trading Day

Tech stocks, particularly those of the chipmakers, rallied on the first trading day of 2018. The Semiconductor Industry Association reported on Tuesday that November chip sales increased by 21.5% to $37.7 billion. Sales in the Americas rose by 40.2% to $8.77 billion but the largest market was China, with $11.9 billion in sales or an 18.5% increase from November 2016.

The PHLX Semiconductor Index rallied 2.8%, its biggest one-day percentage jump since Nov. 11, 2016, when it surged 3.9%. Top gainers were Advanced Micro Devices Inc. (AMD) with a 6.8% jump followed by a 6.2% surge in Micron Technology Inc. (MU).

Shares of Chinese tech companies Alibaba Group Holding Inc. (BABA) and Baidu Inc. (BIDU) rose by 6.5% and 3.5% respectively. Even the Chinese online retailer JD.com Inc(JD) had a great start as it finished 4.5% higher.

California Legalize Weed, Marijuana Stocks Soar

According to Marijuana International Corporation, the largest marijuana-associated firms by market capitalization added about $1.7 billion in value on Tuesday, bringing the total to over $19 billion. Effective January 1, 2018, selling pot for recreational purposes for people 21 or older is now legal in California. They are also allowed to possess up to one ounce of marijuana.

Canadian firm MedReleaf (MEDFF) climbed 27%, Vancouver-based Aurora Cannabis Inc. (ACBFF) jumped 24%, Canada-based Canopy Growth Corp. (TWMJF) rose 9%, Ontario-based Aphria Inc. (APHQF) grew 8%, and another Canadian company Canntrust Holdings Corp. (CNTTF) increased 5%. While California has legalized sales of marijuana, it remains illegal under federal law.

More Retailers Face Bankruptcy & Closure

More brick-and-mortar retailers face bankruptcies and store closures in the U.S. this year. The wave of store closures and bankruptcies that struck last year could further intensify. A prominent commercial real estate firm, Cushman & Wakefield, reported that retailers closed an estimated 9,000 store locations in 2017. That number could increase by 33% in 2018.

The said firm also estimates that about 25 major retailers could declare bankruptcy. Gap Inc., Gymboree, Payless, Rue21, and Walgreens are some of the few major companies closing stores in 2018. Based on the projections by the S&P Global Market Intelligence, the more prominent retailers that might file for bankruptcy are Sears, Bebe, Bon-Ton Stores, and Stein Mart.

Cryptocurrencies Set New All-Time High

On Tuesday, the cryptocurrency market started the New Year with a bang as the total value of the more than 1,300 publicly traded cryptocurrencies set a new all-time high of $667 billion. The list of data came from CoinMarketCap and it might be an indication the entire cryptocurrency market has recovered from the December 22 debacle when a correction occurred. The market plunged more than 30% from around $648 billion to $422 billion that day.

The most notable information is that the world’s largest cryptocurrency may not be a large contributor. Bitcoin’s share of the total market cap has now dropped to an all-time-low. The data suggests that the value of all bitcoins is currently only 35.6%of the entire marketplace.

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