Stock Market's Yearly Win Streaks Challenged In Commodities-Focused 2015

What’ll it be—a finish above or below the Mendoza Line this year for the broad-based S&P 500 SPX SPY? The index’s so-so end to a volatile trading year leaves it dancing around positive 2015 territory (figure 1). The broader stock market largely continues to take its cues from crude oil trading in light-volume holiday action.

Crude oil futures were changing hands near $36.32 a barrel in U.S. markets, on track for a yearly decline of nearly 32%. Of course, a strong dollar relative to its global counterparts was a major story for all financial markets. A stronger dollar is a drag on commodity pricing, while holding potentially negative implications for U.S. exporters. For the full year, the ICE Dollar Index, a broad measure of the currency against major rivals, is up 8.8%. Asian stock markets largely closed out 2015 with losses, while Europe is eyeing its fourth straight year of gains.

At stake on Wall Street? A fourth straight year of gains for SPX —the longest since 2007, when the index closed the books on a five-year winning streak before the U.S. tipped into recession. SPX closed at 2058 last December 31.

Blue-Chip Blues. Meanwhile, the Dow Jones Industrial Average ($DJI) will need to rise some 219 points today alone to salvage a breakeven finish for the year. As is, the blue-chip index is likely to record roughly a 1% loss for 2015, its biggest one-year percentage decline since 2008, and the end of a six-year winning streak.

Tech Stud? The bulls can cheer the performance of the tech-studded NASDAQ Composite (COMP), as this collection of stocks was largely free from 2015 energy-share weakness. COMP is on track for a nearly 7% advance for 2015—a fourth straight annual win and its longest streak since 2007.

Job Market in Focus. Close tabs on U.S. hiring is likely to continue to factor big in 2016 trading, as the pace of job growth and any potential wage inflation risk could determine the speed at which the Federal Reserve returns interest rates to “normal.” This morning, holiday timing likely distorted the latest weekly tally of jobless benefits claims. The less-volatile four-week average did little to sway the Street’s expectations for a stronger —at least moderately stronger—job market. The average of new claims over the past month rose by 4,500 to a seasonally adjusted 277,000, the Labor Department said. This was the highest four-week average since the week ended July 18, but industry economists expect this reading to decline anew in the following week.

Market volatility, volume, and system availability may delay account access and trade executions.

Past performance of a security or strategy does not guarantee future results or success.

Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.

Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.

The information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.

TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2015 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.