On Wednesday, following President Donald Trump’s speech before a joint session of Congress, U.S. stocks had their best day of the year.
The Dow rose more than 300 points to close above 21,000 for the first time, while the S&P 500 traded above 2,400 for the first time before closing at 2,395.
Trump’s speech was short on specifics but the market still loves it. Expect this theme to continue.
Looking out to Thursday, the economic calendar is light with just the weekly report on initial jobless claims set for release. Wall Street economists are expecting claims to total 245,000, up slightly from last week 244,000.
The first tech IPO of 2017, and the most anticipated tech debut since Alibaba came public in 2014, is set for Thursday.
Snap, the parent company of the ephemeral messaging app Snapchat, is set to begin trading on the New York Stock Exchange on Thursday morning. Reports on Thursday afternoon indicated the IPO priced at $17, valuing the company at a bit less than $24 billion.
Much of the focus for the company is likely to be on its wunderkind CEO, Evan Spiegel, who is just 26 and considered, perhaps, to be the heir apparent to Steve Jobs so many in the tech space have been looking for for years.
But as of its debut, the company is not yet profitable. Additionally, its costs of revenue per user have been rising as its losses per user are also on the rise. Certainly, Snap investors are hoping the company turns out more like Facebook (FB) than Twitter (TWTR), but there is no masking that risks abound ahead of this debut.
Additionally, Snap IPO investors will have no say in the company’s operations. This is a sort of in-the-weeds concern for market structure and the evolution of shareholder rights, but the dual-class structure used by Snap and other tech firms has been the target of criticism and this debut will bring back to the surface those concerns.
Here on Yahoo Finance, we like to remind readers that stocks usually go up.
But rarely to stocks rally like they did on Wednesday. And going a step further, rarely do stocks rally over a several year period the way they have during the post-crisis bull market run.
In a note to clients on Wednesday, analysts at Bespoke Investment Group looked at returns over rolling 97-month periods, the length of the current bull run.
“Going back to 1936, only 103 (11%) of the 974 rolling 97-month periods have seen a gain that was larger, with the most recent being fifteen years ago back in October 2000,” Bespoke writes.
“If there’s one difference between now and prior periods, it is that in recent months the slope of the increase in rolling returns has been extremely steep.”
Looking at this chart, then, some might say we’re due for a pullback. As we wrote last week, investors should always be ready for a market decline because history says most every year sees a decline of 4% or more (with this drop usually clocking in at more than 10%).
But rising stocks are not in and of themselves a reason for stocks to go lower in the future.
And as Bespoke writes, “While a pullback can occur at any time, we would note that in the four periods where the S&P 500 saw this type of gain after not having seen one in the prior five years, the index saw positive median returns over the following three, six, and twelve months. Both three months and one year later the S&P 500 was higher all three times.”
Again, stocks usually go up.
Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
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