Last week brought back the extremely non volatile market! Nary a move of >0.2% up or down on the S&P 500 in any of the 5 sessions. After some rallying the prior few weeks this is exactly what the doctor ordered for bulls; this was especially necessary for the Russell 2000. For the week both the S&P 500 and NASDAQ gained 0.2%.
“Investors are following the tax-reform debate, as well as clues as to who will be nominated as the next Federal Reserve chairman. Currently, Fed Gov. Powell appears to be the favorite. He would offer continuity in terms of monetary policy, but his comments suggest a more favorable position with regard to regulatory reform,” said Quincy Krosby, chief market strategist, at Prudential Financial.
Geez is this a great quote….
“There’s no reason to sell. Just sit and watch your stuff go up and that’s why trading volumes are low,” said Randy Frederick, managing director at Schwab Center for Financial Research, referring to measures of volatility, notably the CBOE Volatility Index hanging around historic lows, below 10, as stocks test records.
Minutes from the Federal Reserve’s September meeting suggested caution among policy makers on the next interest rate hike which the market had widely expected in December.
Several Fed officials said that they now believed it would be longer than they had previously thought to get inflation back to the central bank’s 2% target. As a result, many noted that “some patience” was warranted in hiking interest rates in order to assess trends in inflation, the minutes said. Hawks on the committee, like Kansas City Fed President Esther George, want the central bank to continue to hike, warning that delaying rate hikes could spark asset bubbles. Doves, like Minnesota Fed President Neel Kashkari, have argued for no more rate hikes are warranted until inflation was clearly on the path toward 2% or higher.