It’s Thursday, and index markers are still climbing. Ever since we heard Alan Greenspan talking about market corrections, we’ve been waiting for the other shoe to drop – we’ve been looking at the effect of the government shutdown and considering the US/China trade situation and looking for any warning indicators that the bottom’s about to collapse out of this market.
Instead, what you have is green one day, five day and one month charts, with Dow Jones values at nearly $25,000 and the S&P 500 soaring above $2670, although to be fair, the Dow has slid back from yesterday’s rally.
There’s a clue in this Daily Yahoo Finance article yesterday where reporter Emily McCormick capably notes outcomes from recent Federal Reserve talks.
“Investors were watching closely for more clarity surrounding the Fed’s recent rhetoric of being “patient” with monetary policy amid incoming economic data and concerns of a global slowdown,” McCormick wrote. “To that end, the Fed delivered, saying in the statement, “In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.”
The Federal Reserve really takes the headline here, and it’s almost as if the markets are taking their cue from the nuances of the Federal Reserve plans. So if the Federal Reserve says it’s not raising rates, you’re going to see green.
“The Dow slid as U.S. stocks lost steam following a rally sparked by a dovish Federal Reserve policy decision and commentary Wednesday afternoon,” she writes. “Investors have also had plenty to digest amid a busy week for corporate earnings.”
Specifically, McCormick mentions General Electric and Facebook, both of which had a lot of positives to report. All of this supports the temporarily stable pricing of the indices and the general feeling of hope that seems to be infused into today’s markets.
None of this precludes deeper analysis about what cautions lie in wait for investors weeks or months down the road – but for now, we can see that the markets are mollified by Jerome Powell’s remarks and outlook, and for some traders that’s enough for today. Take a look through the end of the week to see if a traditional Black Friday brings significant corrections.