By Dr. Sonu Varghese via

Equity markets surged in 2017, with the S&P 500 gaining 20.8% and the Dow Jones Industrial Average climbing 25.1% (reaching more new highs – 71 total – than any in its history). Technology stocks played the starring role, with the S&P 500 Technology Index lapping everyone else with a whopping 38.8% return. With an economy seemingly going from strength to strength, a puzzle was the lack of inflation and a flattening yield curve – long-term treasury yields fell over the year despite three rate hikes by the Federal Reserve. Also curious was small-cap under-performance – the Russell 2000 Small-Cap Index rose 14.7% in 2017, quite a ways behind its large cap counterparts.

As always, we shy away from making forecasts and predictions. The previous year ended with President Trump signing into law a tax bill that significantly restructures the US tax code, especially on the corporate side. So the big question is what will be the impact of this, and that is where we begin.

Will businesses spend more in 2018, on the back of tax reform and regulatory pullback?

The Trump administration came in promising a more attractive landscape for US businesses via tax reform and a drastic reduction in regulations.

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