Today, the market came roaring out of the starting gate to start the first trading session of 2017. The DOW reached an early gain of 176 points, up to 19,938 even though this was not as high as 19,980 from a few weeks ago when the 20,000 fever was at its peak. The index then proceeded to slide badly from these best levels right after 10:10 AM. The “reason” offered for the decline from the highs was that crude oil prices had slipped…a most bizarre explanation, to say the least.

The price of crude had managed to rise to a high of $55.20 a barrel, a gain of $1.50…but soon reversed to close at $52.48 a barrel. The markets turned around to wind up with a DOW gain of 119 points today. The S&P 500 and NASDAQ both climbed .85% to close up 19 and 45 points respectively.  As I have been pointing out, the strength of the dollar could ultimately hurt the earnings of multinational companies.

Both economic reports released this morning came in better than expected, which is perhaps one of the reasons why the market opened with such a strong upward spurt. The November construction spending came in with a gain of 0.9% and the December ISM Manufacturing Survey rose to 54.7 from the prior month’s 53.2. These are examples of better economic activity which could motivate the Fed to want to raise interest rates on those three occasions that they were interested in doing according to their last meeting.

Bond yields were unchanged at 2.45% for the 10-year Note. The dollar is strong with the Euro lower to 1.04 where it has found some support lately. Gold was actually higher despite the strong dollar and finished at $1,159. The VIX, which rose from support levels near 11 during the decline in equities from the highs, was lower today to finish at 12.85 for a loss of 1.1%.

The S&P 500 currently trades at almost 19 times estimated earnings of $118.50 for 2016. The average P/E multiple for the S&P 500 going back to 1954 has been 16.4 and it has been 14.4 over the last 10 years.

Donald M. Selkin

These are excerpts from Don Selkin’s Daily Market Notes, abbreviated and updated with permission from the author. Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning.  The commentary provided in this Market Letter is intended to provide our customers with timely market analysis and should not be considered a research report.  This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analyses concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, Recommendations regarding increasing or decreasing holdings in particular industries or securities.  This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm.   This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author.  These news sources include the following: Bloomberg Financial, Reuters, and the Associated Press.