WALL Street was generally calmer this year than in previous years, but that doesn’t mean the stock market was devoid of drama.
Big selloffs in biotechnology and social media stocks had strategists predicting doom in the spring, and the plunge in oil prices has clouded the outlook for the coming year.
It was a year when Cynk Technology, a development-stage company with no revenue, was briefly worth US$6 billion (RM21 billion), and when a long-forgotten closed-end fund focused on Cuba — the Herzfeld Caribbean Basin Fund — saw more trading in one day in December than it had in six years.
With that in mind, Reuters asked Wall Street strategists a few questions on odd things to watch for next year.
Shares of Apple Inc, the most valuable publicly-traded United States company, will finish higher for a sixth straight year.
With a current market value of about US$663 billion, if one were to pick a company that would be the first to hit US$1 trillion in value, Apple’s a safe choice but not next year, investors said. The iWatch, its latest product, may not be enough to propel the stock further.
“I don’t really see this company as having another blockbuster category of products. The watch doesn’t feel like a great idea. I’m kind of out of the Apple mystique thing,” said Fort Pitt Capital Group in Pittsburgh vice-president and senior analyst Kim Forrest.
With its gains last Friday, the Nasdaq Composite Index sits just about 200 points shy of the vaunted 5,000 level, which it has not seen in nearly 15 years and its all-time intraday high of 5,132.52 reached on March 10, 2000, isn’t far off.
“I think Nasdaq will test and probably achieve higher highs than we did in 2000 because I think we’re in a secular bull market that has another eight to 10 years left to run,” said Raymond James & Associates managing director Jeffrey Saut.
After a series of market-crippling operational glitches in recent years, found everywhere from Nasdaq to options markets, investors are bracing for more such events.
This year, a gold-mining exchange-traded fund, Market Vectors Gold Miners ETF, dived 10 per cent in the waning seconds of trading one day in early December.
Earlier in the year, high-frequency trading firm Virtu Financial cancelled an initial public offering after the release of Michael Lewis’ book “Flash Boys” brought negative publicity to computerised trading.
None of these incidents were as damaging as the May 2010 “flash crash”.
The most notable this year came out of the bond market in mid-
October, when 10-year Treasuries yields crashed more than 0.3 percentage point without warning.
“There will be an event. At least one, probably more,” said Themis Trading in Chatham, New Jersey, co-manager of trading Joe Saluzzi.
Investors worry that biotech stocks will have a tougher start to the year after pharmacy benefits manager Express Scripts dealt a blow to Gilead Sciences Inc on December 22 when it dropped coverage of Gilead’s hepatitis C treatment.
Biotechs were all over the place this year. They were at the forefront of the selloff in momentum favourites in the spring, and hit another rough patch in December on the Gilead news. Reuters