New Year’s Party Coming To An End

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On Monday, U.S stock markets were on track for a lower open with the losses from banking stocks putting out the flames responsible for Wall Street’s strongest start in over ten years. Last week, the Dow Jones Industrial Average recorded its best first four trading days in a year since 2003, while the Nasdaq and the S&P 500 had their strongest start in twelve years.

“We had a strong market in the past week, and what generally happens in the first week sets the trend for the remainder of the year. Now that it’s established, there could be some profit- taking,” said Peter Cardillo, a chief market economist.

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At 8:36 a.m. ET, Dow e-minis were down 18 points, or 0.07 percent, with 27,390 contracts traded. S&P 500 e-minis were down 5 points, or 0.18 percent, with 138,078 contracts traded. Nasdaq 100 e-minis were down 12.5 points, or 0.19 percent, with 25,860 contracts traded.

The dollar improved against a basket of major currencies, with data revealing a slower than expected growth in U.S. jobs did not hinder the anticipation of additional interest rate increases this year. Comments from Federal Reserve officials over the weekend pointed to the U.S. central bank remains on track for additional increases this year.

“The dollar is reversing and we’re seeing that effect due to some Fed comments,” Cardillo said. A stronger dollar has a habit of weakening revenue for U.S. companies that generate most of their income overseas.


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Later this week, fourth quarter earnings season will commence, beginning with the big banks. Bank of America, Goldman Sachs, JPMorgan and Wells Fargo were all down between 0.2 percent and 0.4 percent. Several of the large U.S. lenders have estimated one-time penalties to their fourth quarter earnings because of the tax cuts.

Investors will be on alert for the speeches from Fed’s Atlanta President Raphael Bostic, San Francisco Fed chief John Williams and Boston counterpart Eric Rosengren regarding their views on monetary policy.

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