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Dec 21, 2016

U.S. Stock Market Future Indications on December 21, 2016: Dow Industrials Poised to Flirt With #Magical 20,000 Level

Sara Sjolin

The Dow average was set to open within striking distance of the psychologically important milestone of 20,000 on Wednesday, as the “Santa rally” that has pushed U.S. stocks to record highs continued at full steam.

Futures for the Dow Jones Industrial Average YMH7, +0.03%  gained 17 points, or 0.1%, to 19,916, putting the benchmark on track to open near the 20,000 handle. On Tuesday, it closed at a record-high of 19,974.62, thanks in part to gains for Goldman Sachs Group Inc. GS, +1.68% and Exxon Mobil Corp. XOM, +0.01%   .
“The 20,000 Dow level has been seen as a somewhat magical target for a long time, and the prospect of the Dow reaching and closing over this level will provide headlines,” said Rebecca O’Keeffe, head of investment at Interactive Investor, in a note.
“However, it also raises some important questions about the lofty levels of markets and their potentially complacent attitude towards potential downside risks,” she added.
The Nasdaq Composite Index COMP, +0.49%  also eked out a record close on Tuesday, while the S&P 500 index SPX, +0.36%  rose 0.4% to close less than a point short of its all-time closing high.
On Wednesday, futures for the S&P 500 index ESH7, -0.08%  were up 0.25 point at 2,266.75, while those for the Nasdaq-100 index NQH7, -0.07%  added 2 points to 4,958.
All three major U.S. stock indexes are on track for yearly gains of around 10% or more, with the biggest chunk of the rally coming in recent months. Analysts peg the rally to optimism that the Donald Trump administration will increase fiscal spending and spur inflation.
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That has fueled a rotation from bonds and into stocks, with inflows into equity funds since the election reaching $63 billion last week, according to a report from Bank of America Merrill Lynch. In comparison, stock-fund outflows tallied $151 billion between January and October.
“Bears have been carried out [in 2016], as a wave of market liquidity pounced on any downturn and squeezed the market higher,” O’Keeffe said.
“However, as we head towards the new year, whether this confidence will remain justified in 2017 is a rather more moot point. Like this year, 2017 could bring about a range of potentially seismic events, with European elections and many of Donald Trump’s campaign pledges high on a list of potential negative surprises,” she added.
On Wednesday, investors were unlikely to get any major economic surprises, with only existing home sales among top U.S. data releases. Economists polled by MarketWatch expect sales ran at a seasonally adjusted annual rate of 5.5 million in November, down slightly from 5.6 million in October.
Movers and shakes: Shares in Nike Inc.  NKE, +1.85%  rose 2% ahead of the bell after the sportswear maker late Tuesday reported earnings ahead of forecasts.
FedEx Corp. FDX, +0.57%  could also be active after the shipping giant late on Tuesday posted a rise in earnings, but missed analyst forecasts.
Coca-Cola Co. KO, -0.02%  inched 0.2% higher. The drinks company said it is buying a 54.5% stake in Coca-Cola Beverages Africa from Anheuser-Busch InBev SA ABI, +0.15% BUD, +0.24%  for $3.15 billion.
J.P. Morgan Chase & Co. JPM, +1.29%  and Citigroup Inc. C, +1.91%  were also in focus, as they were among banks fined by the Swiss Competition Commission over alleged rates rigging.
Other markets: The dollar slipped against most other major currencies, pulling the ICE Dollar DXY, -0.13%  down from a 14-year high. The index was down 0.1% at 103.19.
The dollar weakness helped gold GCG7, +0.14%  , which rose 0.2% to $1,135.50 an ounce. Oil prices CLG7, +0.49% LCOG7, +0.49%  were also higher.
European stock markets traded lower, with liquidity concerns over Banca Monte dei Paschi di Siena SpA BMPS, -4.85%  pulling the banking sector lower.
Asia markets closed mixed