After dropping 3.8% during the Thanksgiving week, the market rebounded last week – with the Standard & Poor’s 500 gaining 4.8%, the Dow Jones Industrial Average rising 5.1%, and the NASDAQ Composite adding 5.6% (what a difference “a week” makes). We mentioned in our last memo how the market was focused on two key issues, interest rate policy by the Federal Reserve Bank, and trade with China.
Regarding both of these big picture items, the market liked what it heard. Stocks jumped last Wednesday after Fed Chair Powell seemed to have a more dovish tone, and said rates were “just below” their neutral level. Investors took this as a sign of fewer rate hikes to come, and this was a major force behind last week’s gains. The market also grew more optimistic last week that there may be some improvement in the trade relations between the U.S. and China.
This positive sentiment carried over to early morning trade today, after reports Trump and his Chinese counterpart Xi agreed to a pause in the trade war between the U.S and China. So overall, some of the tension and pressure has been taken off the market. Still, Fed policy is dynamic, and there is a long way to go with resolving US-China trade/tariff issues. As we have seen the last couple weeks – the stock market is a lot like the weather in New England, if you don’t like the current conditions, just wait a while.
Remember – investing is a marathon, not a sprint!
All the best,
Southport Station Financial Management, LLC