Very tricky action in the market this week. Monday’s rally looked really bullish – we stated at the end of the prior week we wanted to see how this small wedge in the S&P 500 and NASDAQ charts resolved. It looked like a breakout to the upside Monday. However, a nasty reversal Tuesday – with a close below the prior day’s low – was daunting. Then Wednesday and Thursday the action was poor. By the end of the week things were not looking anywhere near like they did on Monday at the close. All in all, it was another week of volatility not seen in almost all of the very unusual 2017. The volatility is still not subsiding – we had daily move of >1% four of five days this week; in 2017 you could go months without a single day of that sort of swing!
We also seem to be past the stage of the “Goldilocks” economy where any news is good news – new Fed Chairman testified Tuesday the economy is strong, and traders freaked out fearing rate hikes yada yada yada.
“We’ve seen continuing strength in the labor market. We’ve seen some data that will, in my case, add some confidence to my view that inflation is moving up to target. We’ve also seen continued strength around the globe, and we’ve seen fiscal policy become more stimulative,” Powell said in testimony. Powell’s comments, especially his personal view about the economy, appeared to turn investors cautious as they considered the possibility of faster pace of rate increases.
Speaking of unusual the S&P500 actually finished the month negative for February. That should not be considered unusual – but it has been of late. That’s the first losing month in 10!!
The other”highlight” of the week was President Donald Trump saying he would impose tariffs on steel and aluminum imports, raising concerns of protectionist trade policies
Trump told steel and aluminum executives gathered at the White House on Thursday that the U.S. would announce tariffs on imports of those products next week. Trump said the U.S. would set tariffs of 25% for steel and 10% for aluminum.