Saturday, 7 January 2017

US stocks hit record highs but may see sell-off

Markets were mixed on Friday.

The US stock market performed best, with the S&P 500 and Nasdaq Composite rising 0.4 percent and 0.6 percent respectively to new all-time highs.

Elsewhere, though, the STOXX Europe 600 slipped 0.1 percent and the Nikkei 225 fell 0.3 percent.

Helping to boost US stocks on Friday was the employment report, which showed that the US economy added 156,000 jobs in December.

“This report is very good,” said Michael Arone, chief investment strategist at State Street Global Advisors.

However, the US stock market's record-breaking run is turning some analysts cautious.

Thomas Lee, managing partner and co-founder of Fundstrat Global Advisors, wrote in a note on Friday that the “bond market is signaling inflation confusion” and a flattening long-term yield curve. That “generally leads to a 5 to 7 percent selloff”.

Meanwhile, Jim Paulsen, chief investment strategist at Wells Capital Management, told CNBC on Friday that the 2017 stock market reminds him of the one in 1987, when a recovering economy led to an “explosion” in the stock market and bond yields before the market crashed.

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