2016 in Review: Saying Goodbye to an Erratic Year

2016 was a roller-coaster ride for the stock market -- and society as a whole

by Andrea Kramer |

Published on Dec 29, 2016 at 12:50 PM
Updated on Jan 3, 2017 at 8:37 AM

The past year was chock-full of stranger things, with 2016 giving us the “Brexit” and the biggest presidential election shocker of our lifetime, to name just two. It was a year marked by dichotomy and polarizing extremes, not only for stocks and commodities, but for politics, pop culture, and the world in general. With this erratic year on the way out, we thought we’d take a walk down Memory Lane, revisiting some of the biggest, best, and worst stocks and stories of 2016.

A Broad-Market Recap: It Was the Best of Times, It Was the Worst of Times, It Was the Best of Times...

The year started out rough for stocks, with the Dow Jones Industrial Average (DJIA) marking its worst opening day since 2008, and stocks ultimately suffering their worst January since 2009. Thankfully, however, the oft-cited January Barometer didn’t pan out this year, with the markets shrugging off a typically ominous month to eventually explore record highs. Amid the first-quarter uncertainty -- not to mention a global Zika emergency -- gold futures notched their best month in four years in February, soaring 10.6%, while crude futures tanked amid concerns about oversupply and the global economy.

Things turned around in a major way in March, though, with the Dow and S&P 500 Index (SPX) wrapping up their best month since October. By April, the indexes were on their way higher, though hawkish Fed commentary and lackluster earnings out of the retail sector kept stocks at bay in May, resulting in the Dow's worst weekly losing streak since 2014.

Again, stocks picked up momentum in early June, but the era of good feelings wouldn't last long. The relatively surprising Brexit vote in late June rocked global markets, sending the major market indexes reeling for their worst two-day slide since August 2015. What's more, even the CBOE Volatility Index (VIX) dropped -- setting off a signal not seen since April 2009.

But the roller-coaster ride was far from over. As soon as the SPX took a nosedive, it bounced back again, enjoying its fastest surge since 2009 and hitting record highs by mid-July. After all that volatility and the steepest VIX slide ever, the S&P went on to endure its quietest stretch since 2014 in August.

The macro uncertainty regarding the highly anticipated September Fed meeting kept stocks in check, and after that came a bout of pre-election jitters. Ahead of the presidential election, the S&P suffered its worst losing streak since the Great Recession.

But then came Nov. 8, and Donald Trump's shocking presidential victory -- which initially sent Dow futures more than 600 points into the red pre-market -- providing the catalyst that would send stocks on a tear, and fuel a major sentiment shift. The Dow, S&P, and Nasdaq Composite (COMP) assailed all-time highs, and the Russell 2000 Index (RUT) also went on to achieve record heights and its best run since 1996. As safe-haven demand depleted, and as the U.S. dollar skyrocketed, gold -- once the 2016 darling -- turned tail, resulting in its longest weekly losing streak in years. Meanwhile, oil prices popped on promised production cuts from a major cartel.

Now, with 2017 staring us in the face, and a new administration set to take office, the Dow is just off its quietest stretch since 2014 -- and in the midst of its longest weekly winning streak in years -- with Wall Street holding its collective breath as the index faces off against the key 20,000 level. The Nasdaq, meanwhile, has continued its journey into record-high territory, with the S&P and RUT not far behind. And with optimism skyrocketing, the VIX is just off its lowest point since 2014.

2016 review SPX chart



Best and Worst Stocks of 2016

Below are the best- and worst-performing S&P 500 Index stocks of 2016 (as of Dec. 28), sorted by return. Even with a negative tweet from Citron Research "harshing its mellow" this week, semiconductor stock NVIDIA Corporation (NASDAQ:NVDA) has been the stock to beat in 2016, more than tripling in value. On the flip side, concerns about drug pricing -- more on that in a minute -- put Endo International plc - Ordinary Shares (NASDAQ:ENDP) at the top of the worst SPX performers list. Looking ahead, here are 25 stocks that could take off -- and 25 more that could tank -- in January, if history is any indicator.

best of 2016 dec 28

worst of 2016 dec 28

Notable Themes of 2016: Hacks and Feds and Tweets (Oh My)...

SHOCKERS: Aside from the aforementioned Brexit vote and the surprise Trump victory, several other "shockers" emerged in 2016, particularly in the sports world. The Chicago Cubs won the World Series in a seventh-game, extra-innings knuckle-biter, breaking a 108-year "curse," and the Cleveland Cavaliers rallied back from a 3-1 series deficit to help LeBron James bring his hometown the title for the first time since 1964. In Rio, meanwhile, the "Final Five" won our hearts and the team gold in gymnastics at the Summer Olympics, while swimmer Ryan Lochte earned himself a 10-month ban for filing a false robbery report.

Drugmakers: 
A handful of biotechs were called out onto the proverbial carpet this year -- and ended up on the Worst of 2016 list, above -- with inflated drug prices a major talking point among presidential candidates. While most of the chatter was coming from the left, Trump after his win also vowed to "bring down drug prices."

Feds: The FBI not only tangled with Apple Inc. (NASDAQ:AAPL), which refused to unlock the phone of a mass shooter, but also took aim at Secretary of State and one-time presidential hopeful Hillary Clinton.

Hacks: Speaking of Clinton, not only was the Democratic National Committee (DNC) the target of a major hack -- which Clinton blamed on Russia, and which resulted in a lot of angry Bernie Sanders fans -- but Yahoo! Inc. (NASDAQ:YHOO) confessed to the two biggest data breaches on record. Even AAPL users weren't safe in 2016, and neither were world leaders and billionaires, courtesy of the Panama Papers.

Foreign relations:
 While the U.S. and Cuba finally extended an olive branch after decades -- and the death of Fidel Castro only fanned the flames -- accusations that Russia-backed hacking (again!) interfered with the U.S. presidential elections have garnered sanctions from outgoing President Obama. In China, meanwhile, things have grown a little chilly since the election.

Tweets: Social media platform Twitter Inc (NYSE:TWTR) moved the markets like never before. Whether it was Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk, notable short seller Citron Research, or the president-elect himself, Wall Street kept one eye on the Twitter feed this year. Below are some notable tweets from the past 12 months:

 



















 

 

For the Time Capsule: Buzz Words and Goodbyes

Below are some words that made it into the 2016 lexicon -- like them or not -- as well as just some of the many notable (or notorious) personalities and political figures that passed away this year.

2016 Buzz Words


2016 RIP



In conclusion, 2016 was a rocky year by most accounts, though it ended up well for the stock market, at least. It's unclear what 2017 will bring -- three Fed rate hikes? a Snapchat IPO? -- but here's wishing all our readers a safe, happy, healthy, and profitable year ahead.

Let us help you profit from market volatility. Target big gains in short order with a 30-day trial of Schaeffer's Weekly Volatility Trader!
JOIN FREE

Receive Schaeffer's Opening View every morning before the bell.


MORE | MARKETstories


Dow Suffers Worst 2 Weeks Since Brexit
The Nasdaq wrapped up its longest weekly losing streak since May 2016
The Sporting Goods Stock Bucking the Trend
Analysts are expecting one semiconductor stock to double
Rare RUT Signal May Spell Trouble for Small-Cap Stocks
The small-cap index just fell below its 200-day moving average

Partnercenter


TRADING SERVICES | FEATUREDproducts


By MG 2016
In March of 2016, I was introduced to Expiration Week Countdown.  The results are better than words!
Options trading made simple.
Schaeffer's Investment Research, Inc. is dedicated to providing subscribers advantages in options trading and investing.  Our independent market research services create profitable opportunities for investors at every level.