Energy Ran Out Of Steam In 2015

According to Reuters, U.S. markets will start 2016 with a lot of caution, without any clear momentum in either direction after a lackluster 2015.

Crude oil prices posted their second year of losses, pushed lower by an unprecedented global glut, and that weighed on the markets.

Convergex’s Nick Colas told Reuters that the trend will continue into the New Year.

“I’d say, top of mind for investors certainly in the first quarter, oil prices, definitely. The effect of oil on the high yield market which has been a real theme in the back half of this year. That is going to persist and I think overall volatility, equity volatility is going to be the headline issue for the first half of next year,” said Colas.

The buoyancy of Nasdaq, however, in 2015 was attributed to high profile tech and media companies such as Netflix, Amazon and Alphabet, which changed its name from Google, hitting record highs.

Ken Kamen President of Mercadien Asset Management said, “We are going to start to see a movement away from that narrow band of stocks, the Facebooks, the Apples, the Googles, where everyone has been piling into because of momentum, and quality is going to start to matter again. You know, companies with strong balance sheets, strong earnings strong cash flow are going to really get their day.”

In the meantime, Investors will be eyeballing the Fed, which after keeping investors on edge for most of the year, raised rates by a quarter of a point in December.

In expressing his view on the current scenario, John Mousseau, director of fixed income, Cumberland Advisors said, “We don’t expect them to necessarily raise at every Fed meeting. They may not even raise a quarter point. They may use an eight of a point. So, maybe, by the end of next year, you get somewhere in the neighborhood of possibly one percent maybe one and a quarter.”

The next Fed policy meeting for investors to watch for is scheduled to begin on January 26th.