As Wall Street’s best year in more than 15 draws to a close, few are expecting a repeat performance in 2014, though traders have plenty of reasons to feel optimistic.
While the market will likely enter January quietly, with many traders still out for the holidays and few major catalysts, the upward trend is seen continuing next week, especially in some of 2013’s high-flying names.
Economic growth is expected to accelerate next year, boosting employment and consumer purchasing power. But with markets repeatedly notching all-time highs, that may not translate to market gains as dramatically as in 2013.
“There’s a pervasive feeling that the economy is getting better, and the Fed is still on the market’s side after saying it would keep rates low,” said Donald Selkin, chief market strategist at National Securities in New York.
“However, while new money will still be flowing into stocks next year, probably we’ll see less money come in. There’s little chance of another 30 percent gain or so next year.”
The S&P 500 .SPX has risen 29 percent so far in 2013, its best annual performance since 1997. The Dow Jones industrial average .DJI is up 26 percent while the Nasdaq is up nearly 38 percent.
The gains have been widespread, with all 10 S&P 500 sectors higher on the year. The weakest group, telecoms .SPLRCL, rose 6.5 percent while consumer discretionary .SPLRCD led the year with a gain of 40 percent.
