A record year for the S&P 500: The index finished 2017 with 12 months of gains

Reuters / Brendan McDermid

  • The S&P 500
    finished 2017
    with 12 months of gains.
  • That has never happened before.
  • Earnings growth was strong, all 45 economies under the
    Organisation for Economic Cooperation and Development were
    expanding, and investors started to price in the effect of the
    new US tax law.
  • Some analysts expect 2018 to be more volatile.

What a year.

For the first time, the S&P
ended every single month of a calendar year with a gain.

It came very close three times: in 1958, 1995, and 2006, when it
had 11 "up" months. The worst year was 1974, when it was positive
in only one month.

There was no shortage of news this year – from the threat of
nuclear war to unending warnings that the
stocks are too expensive
– to deter the bull market.

Yet here we are. In February, the S&P 500 was already trading
at 2,364, the
average point
that Wall Street analysts had forecast for

It closed at 2,673.63 on Thursday, a 19.4% gain this year. That
was the highest since 2011.

image001 (2)

LPL Financial

It wasn’t only the US stock market that had an impressive year.
Almost every major equity index will finish positive for 2017.
That’s unsurprising, given that for the first time in a decade,
all 45 economies in the Organisation for Economic Cooperation and
Development were growing.

US companies, especially in the energy sector, pulled further
away from an earnings recession that lasted from the second
quarter of 2015 through Q3 2016. They’re now on track for the
best year of earnings-per-share growth since 2011.

And then there’s US President Donald Trump, who has repeatedly
taken credit for the rally.

Though it isn’t 100% his – for all the reasons listed above and
because the bull market was going seven years strong before his
election – the prospect of tax cuts boosted investor sentiment.
For some time, it supported the
highly taxed companies
that would benefit the most. Many

analysts have forecast
that it will be an earnings booster in

Some of them also think the best of this party is over. Morgan
Stanley, for example, is still bullish but predicts that next
year won’t be as easy. As stocks hit ever-increasing highs,
Cboe’s volatility index plummeted to a historic low.

"After a very painful slide in volatility for many traders
looking for a rise the past several years, we have finally
reached a point where
betting on higher volatility
will pay off," Mike Wilson, the
chief US equity strategist at Morgan Stanley,
said in a recent note

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.