The U.S. stock market rallied in January as the S&P 500 index gained 7.8 percent following the 9.1 percent drubbing that took place in December. Concerns about the government shutdown, ongoing trade war with China, and a major policy mistake by the Federal Reserve weighed heavily on the markets late last year. Those concerns receded in January as the government shutdown ended, trade talks with China continued, and the Federal Reserve made a 180 degree reversal in policy.
January 2019 Insights
The U.S. stock market came under intense selling pressure in December as fears of a major policy mistake by the Federal Reserve gripped markets. The U.S. stock market experienced one of the most volatile months in years as the S&P 500 index fell 9.1 percent in December as a slowing global economy, the effects of the ongoing trade war with China, and political uncertainty in the U.S. and Europe also weighed on markets. The decline occurred despite the S&P 500 having the largest single-day point gain in its history.
Federal Funds Rate
The Federal Funds rate is a subcomponent in the Interest rate indicator in TJT’s proprietary InVEST Risk Model®.
On Wednesday, December 19th the Federal Reserve raised the federal funds rate 0.25% to a range of 2.25% to 2.50%. It is the ninth increase since the Federal Reserve started raising interest rates in December 2015 and the fourth interest rate increase in 2018.
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December 2018 Insights
Volatility spiked in the U.S. stock market in November with several 500-plus point moves in both directions in the Dow Jones Industrial Average. Concerns centered around a deceleration in global economic growth due to the ongoing trade war, a possible policy mistake by the Federal Reserve, the ramifications of a “divided Congress” following the mid-term elections, and a substantial decline in oil prices, among others.
Index of Industrial Production
Index of Industrial Production is a subcomponent in the Economic cycle indicator in TJT’s proprietary InVEST Risk Model®.
The industrial sector accounts for less than 20 percent of GDP. Yet, it creates much of the cyclical variability in the economy. Contact us to learn why this is important when managing your money.
November 2018 Insights
Volatility returned with a vengeance in October as the market experienced the biggest monthly selloff since 2011 with the Dow Jones Industrial Average, S&P 500 Index, and NASDAQ Composite falling 5.7 percent, 6.7 percent, and 9.2 percent, respectively from their all-time closing highs. In just two days, October 10th – 11th, the Dow lost 1377 points, or 5.2 percent.
There was no shortage of reasons for the decline given various concerns including the upcoming mid-term elections, the ongoing trade war with China, concern about Federal Reserve interest rate policy, rising geopolitical tensions, and slowing global growth to name a few. Nonetheless, what is not in dispute is that the market direction changed dramatically following an interview by Fed Chairman Jerome Powell on October 3, 2018. Whether intentional or not, Mr. Powell’s comments seemed to convey a greater sense of urgency on the part of the Fed to raise interest rates more aggressively.
October 2018 Insights
September marked the ten-year anniversary of the Lehman Brothers bankruptcy that caused the financial markets to seize up around the globe. And as is often the case, there is a lot of “revisionist history” going on by a number of key players in an attempt to deflect criticism. However, as you will see, there were many things that preceded the Lehman Brothers filing that sowed the seeds of the crisis. The good news is that much has changed for the better, yet some important lessons are starting to fade.
AAII Investor Sentiment Survey
The AAII Investor Sentiment Survey is a subcomponent in the Sentiment indicator in TJT’s proprietary InVEST Risk Model®.
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The AAII Investor Sentiment Survey has become a widely followed measure of the mood of individual investors. The weekly survey results are published in financial publications including Barron’s and Bloomberg and are widely followed by market strategists, investment newsletter writers and other financial professionals. Source: AAII
September 2018 Insights
The S&P 500 index rallied in the month of August to close above the 2900 level for the first time in history. At 2901.52, the S&P gained roughly 3 percent in August as a strong dollar attracted foreign capital, in addition to a healthy U.S. economy, accommodative Federal Reserve policy, and higher corporate profits.