The week that was…
The never ending rally continued at pace this last week, with solid gains Mon thru Wed, followed by some quiet consolidation the final 2 days of the week. This action simply is a grind for any remaining bears to have to deal with as there is no relent. As happened late in the prior week (“phenomenal” was the word), indexes rallied Wednesday as President Donald Trump said a “massive” tax plan would be coming in the “not-too-distant future.” Yellen testified and Donald showed restraint in not tweeting about her.
“Even though we have social unrest and building geopolitical tensions, the market refuses to fall in any meaningful fashion, which means there remains a very strong underlying bid in the market,” said Adam Sarhan, chief executive officer of 50 Park Investments. “This is due to a confluence of a few factors, including the earnings recession being over, a very strong bull market, and the hope for future prosperity under the pro-growth policies of the new administration.”
One thing to note is that while the senior indexes full of large caps continued to levitate, the Russell 2000 (smaller cap, U.S. oriented stocks) stalled again. So bulls will call that a healthy rotation, while bears will say a warning sign.
During Congressional testimony mid week, Federal Reserve Chairwoman Janet Yellen signaled that the central bank could gradually raise interest rates sooner rather than later. Some market participants read Yellen’s reference to the Fed raising rates at “upcoming meetings” as indicating that an increase of benchmark rates at the Fed’s March meeting, which Wall Street has been pricing in as unlikely, is still on the table. Fed member forecasts for rates suggest that the central bank will raise rates three times in 2017, but the market isn’t expecting an increase before the Federal Open Market Committee’s June meeting.
A quiet week of economic news but the Producer Price Index for January jumped by 0.6%, the largest rise since 2012, suggesting inflation may be heating up. Wednesday, retail sales were reported to have gained 0.4% in January vs expectations of 0.2%
We mentioned last week that it had been 80 days without a loss of 1% or more. So obviously that means zero down days of 1%+ thus far in 2017. Here is how that compares to other years.Continue reading