Friday, January 20, 2017
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Market Digest Online FRIDAY, JANUARY 20, 2017: U.S. equities closed lower on Thursday, with real estate falling around 1 percent, as investors eagerly awaited President-elect Donald Trump's inauguration.

"Everyone is just waiting for the inauguration," said Jeremy Klein, chief market strategist at FBN Securities. "The market just feels a little heavy." He also said: "When you start seeing volatility in other macro markets — specifically FX — that's going to take its toll on stocks." The U.S. dollar spiked against a basket of currencies on the back of strong U.S. economic data.

The Dow Jones industrial average briefly fell about 100 points in afternoon trading before closing about 70 points lower, with Goldman Sachs contributing the most losses.

"I think this is a pause ahead of the inauguration because there is so much policy uncertainty," said Kate Warne, investment strategist at Edward Jones. "We don't know what they will be focusing on first." Trump is set to take the oath of office on Friday.

The S&P 500 dropped around a third of a percent, with real estate leading decliners. The Nasdaq composite fell 0.3 percent. "Part of it is people taking profit off the table," said John Traynor, chief investment officer at People's United Bank. "We were surprised by the November-December rally, so taking profit off the table the day before the inauguration makes sense."

Stocks in the United States rallied to record highs following Trump's victory in November, on the back of expectations for lower corporate taxes, more government spending and deregulation of certain sectors.

"The stock market tends to like a straight forward story, so if the new administration concentrates on its pro-growth policy actions, the narrative stays relatively simple and shares may find good reasons to continue their climb," Robert Landry, portfolio manager at USAA, said in a note. "But if other priorities compete for the president's energy and focus — immediate repeal of the Affordable Care Act, creation of costly trade barriers and any number of foreign policy actions, just to name a few — the growth story could get muddled and the markets choppy," Landry said.

In economic news, weekly jobless claims dropped 15,000 to 234,000, around their lowest levels in 40 years. Housing starts, meanwhile, spiked 11.3 percent in December, beating estimates. The Philadelphia Federal Reserve business conditions index rose to 23.6, above a consensus estimate of 15.8.

Naeem Aslam, chief market analyst at Think Markets in London, said the Philly Fed data shows "how optimistic the manufacturing industry is under the leadership of new upcoming president. This will support the U.S. economy further and strengthen the jobs market further."

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