The Market This Week

This week the market rallied on lower oil prices, economic reports, and hopes that the  Federal Reserve has indeed ended its interest rate increases.

Recap of Weekly Performance
DJIA- Up 168.66 or 1.48%
S&P 500- Up 20.95 or 1.61%
Nasdaq- Up 69.80 or 3.22%

The Dow is now within striking distance of its all time high of 11,722.98 set in January of 2000. The Nasdaq and S&P are as well touching multi-year highs, as the markets have been very receptive to economic data that has been released.

Crude Oil was down $2.92 a barrel or 4.41% for the week. The continued decline in oil has been the relief both the markets and consumers have been seeking. Prices at the pump for consumers are dropping daily with the continued decline in oil. Crude settled at $63.33/barrel Friday on the New York Mercantile Exchange.

The Labor Department reported that the Consumer Price Index (CPI) increased by a mere 0.2% in August, which is down from 0.4% in July. These factors have led investors to believe that the Fed will not increase interest rates at their next meeting. Any sign of receding economic growth is great news as it dries the fears of inflation and eliminates any need for further rate increases. The Federal Reserve uses rate increases to control overheating the economy, but at the detriment of consumers and businesses, as borrowing becomes more expensive. This perfect situation we seem to be entering (it is still too soon to call though) is what investors call a “soft landing” or “goldilocks” economy.

It seems the markets in the near term will benefit from the excellent economic data as well lowered oil prices. However, a pull back could be in order as traders take their profits off the table. Until next week have a productive and profitable week!

Ben and Jon
ModernGrahan.com
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