2017 in Review: FAANG, Fed, 'Fire and Fury,' and More

From travel bans to bitcoin, we explore the biggest headlines on Wall Street this year

Dec 29, 2017 at 12:51 PM
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It's been a banner year for the U.S. stock market, even as the American social and political climates swirled with controversy. The major market indexes rallied to record highs amid the lowest volatility in years, and a strengthening economy triggered a trio of Fed rate hikes. So-called "FAANG" stocks and bitcoin were all the rage, and the CBOE Volatility Index (VIX) -- or Wall Street's "fear gauge" -- fell to record lows. Hurricanes and data breaches also moved stocks, but perhaps the single biggest equity catalyst this year was President Donald Trump. So, let's venture through the intersection of Wall Street and Memory Lane for the biggest stock and sector stories of 2017.

Major Stock Indexes Soar, Dow Makes History

The Dow Jones Industrial Average (DJIA) broke above several millennium milestones in 2017, and is on pace for its best year since 2013. With just two trading days left in the year, the index scored its 71st all-time closing high, topping 1995 for the most ever in one calendar year. In addition, the Dow is about to extend its longest monthly win streak since 1958, and its longest quarterly win streak since 1997. Plus, it'll be the first year since 2006 without a three-week losing streak for the Dow.

Boeing (BA) stock was by far the best blue chip over the past year, followed by Caterpillar (CAT). Meanwhile, General Electric (GE) stock was hands-down the worst Dow stock, and this year cut its dividend for the first time in decades.

The S&P 500 Index (SPX) also scored a string of record highs in 2017, and is set for its best year since 2013. The SPX is also pacing for its longest monthly win streak since 1983, and its longest quarterly win streak since 2015.

Invisalign maker Align Technology (ALGN) topped the S&P this year, on pace for a 135% gain. Oil-and-gas stock Range Resources (RRC) was the worst stock on the index, giving up nearly half its value in 2017.

best spx stocks 2017

worst spx stocks 2017

The tech-rich Nasdaq Composite (IXIC), meanwhile, also rallied into uncharted territory, though a couple tech-sector pullbacks created a bit of a detour -- and sent up some divergence alarms. Nevertheless, the IXIC is set for its best year since 2013, and a sixth month and quarter higher.

Biotech stocks led the pack on the Nasdaq this year. Marinus Pharmaceuticals (MRNS) paced the advance, skyrocketing more than 750%! Telecom concern Frontier Communications (FTR) was the worst Nasdaq member, dropping more than 86%.

best nasdaq stocks 2017

worst nasdaq stocks 2017

VIX Eyes Steepest Annual Drop Since 2009

The VIX had a relatively quiet year, despite a few short bursts higher. In fact, not only did the "fear barometer" touch a record low, as mentioned earlier, but it failed to generate three straight weekly gains at all in 2017 -- something that's happened just one other year, in 2010 -- despite two back-to-back spikes in August. The volatility index is now pacing for its steepest annual drop since 2009, the start of the current bull market.

Trump Moves Dollar, Stocks

President Trump took office in January, and the new commander-in-chief moved several sectors out of the gate, not to mention the U.S. dollar. Concerns about the immigration ban initially weighed on the travel sector, Trump's executive order on the Keystone XL pipeline moved energy stocks, and drug stocks reacted to accusations that pharma companies are "getting away with murder" and need to "get prices down."

Further, the president turned his Twitter fury toward Nordstrom (JWN) after the retailer said it would no longer sell daughter Ivanka's brand. Even before Inauguration Day, criticism from the president-elect weighed on Ford (F) and General Motors (GM) stocks.

Several setbacks to Trump's plan to repeal Obamacare also impacted stocks -- not to mention Trump's approval rating -- especially in the healthcare and insurance sectors. In late March, the Dow suffered its worst week since the election, after Trump asked House Speaker Paul Ryan to pull a vote on the GOP healthcare bill. Senator John McCain also shook things up in D.C. However, while Republicans failed to take down Obamacare in Congress, Trump signed an executive order meant to weaken the legislation, which initially weighed on several hospital stocks.

Trump also took aim at North Korea, which became increasingly brazen with its nuclear tests. The U.S. president vowed to meet North Korean hostility with "fire and fury" -- sending defense stocks higher, and South Korea and Japan ETFs into the red.

Of course, we'd be remiss not to mention the controversy surrounding Russia's role in the U.S. presidential election. The fear gauge saw its biggest one-day rise since the Brexit backlash, amid reports Trump told former FBI director James Comey to back off his investigation of former national security advisor Michael Flynn. Later, option speculators flooded volatility trades and Russia ETFs in early December, after Flynn pleaded guilty to lying to the FBI.

The first year of the Trump administration did, however, manage to accomplish one thing on its to-do list in 2017: tax reform. After two votes in the House of Representatives, the bill was signed into law on Dec. 22. With the corporate tax rate set to drop, several big-cap companies vowed to boost wages with their tax savings. Meanwhile, analysts expect these telecom stocks, these mid-cap drug stocks, and these credit card stocks to benefit from the bill.

More Big Stock Stories of 2017

IPOs: A handful of notable initial public offerings (IPOs) made waves this year, including Roku (ROKU) and Snapchat parent Snap (SNAP). Meal-delivery concern Blue Apron (APRN) also went public, but the shares got smoked amid concerns about Amazon (AMZN) competition.

buzz words 2017

Amazon Extends Its Reach: In fact, Amazon's buyout of Whole Foods rocked several stocks this year, including United Natural Foods (UNFI) and this grocery stock. In addition, concerns about Amazon's foray into prescription drugs also moved several pharmacy stocks, including Walgreens (WBA) and Rite Aid (RAD). On the flip side, new partnerships with Amazon lifted Sears (SHLD) and Nike (NKE) stocks.

New Product Launches: Elsewhere in the "FAANG" world, Apple in September unveiled its latest line of products, including the $999 iPhone X. However, recent concerns about demand weighed on AAPL and several Apple suppliers. Meanwhile, Tesla (TSLA) made noise after unveiling the electric semi truck, securing orders from JB Hunt (JBHT) and Pepsi (PEP), among others.

Data Breaches and Cyber Attacks: Credit concern Equifax (EFX) stock took a nosedive after the company reported a massive data breach. The disclosure sparked outrage from the American public and Washington, D.C., but provided a brief lift for several cybersecurity stocks. Elsewhere, Microsoft (MSFT) took a hit in May over the now-notorious WannaCry ransomware attack.

Big Year for the Fed: Amid signs of a strengthening job market and rising inflation, the Federal Reserve issued three rate hikes in 2017: in March, June, and December. The interest rate decisions tended to bolster bank stocks, and Fed Days tended to mark notable closes for the major market indexes. Looking ahead, Fed Chair Janet Yellen will say goodbye, set to be replaced by Jerome Powell.

Hurricanes Wreak Havoc: The end of summer brought devastation for residents of Houston and Puerto Rico, especially, which were hit hard by Hurricanes Harvey and Irma, respectively. Several insurance stocks took a spill as a result, including Travelers (TRV), while the travel sector also felt the effects. On the other hand, home-repair stocks like Home Depot (HD) saw a boost on expected demand for building supplies.

OPEC Scales Back: While Harvey and Irma also weighed on oil stocks, one of the main catalysts behind crude oil prices in 2017 was the Organization of the Petroleum Exporting Countries (OPEC). The oil cartel and several non-OPEC members agreed to curb oil production through 2018.

Solar Stocks Shine: A major tariff ruling on solar panel imports propped up several solar stocks in September. Solid earnings and guidance also helped First Solar (FSLR) and Canadian Solar (CSIQ) stocks higher.

M&A, Net Neutrality Move Telecoms: Sprint (S) and T-Mobile (TMUS) made noise this year, after calling off their merger, while AT&T (T) and Time Warner (TWX) also garnered headlines by battling with the Justice Department. Elsewhere, to no one's surprise, the Republican-led Federal Communications Commission (FCC) formally voted to repeal the Obama administration's net neutrality rules.

Bitcoin Boom: Bitcoin futures began trading in mid-December, and the cryptocurrency has been volatile, to say the least. Overstock.com (OSTK) was ahead of the curve, announcing in August that it would begin accepting all major cryptocurrencies. Several other companies tossed their hats into the blockchain ring, including Wall Street rookie Longfin (LFIN), Net Element (NETE), and even Long Island Iced Tea (LTEA) -- now known as Long Blockchain.

Stocks to Watch in 2018

Looking ahead, these stocks tend to outperform the first week of a new year, while these 25 stocks tend to struggle. Meanwhile, these have been the best stocks to own in January and the first quarter, historically. On the flip side, here are the historically worst stocks for January and the first quarter.

What This Election Year Means for Stocks

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