The Dow Jones Industrial Average and S&P 500 closed out February with gains of 11 percent, the best two-month start since 1987 and 1991, respectively. The NASDAQ Composite and Russell 2000 were up 14 and 17 percent, all of which is to say that those investors who were crying the blues at the end of last year, are now feeling a bit of spring in their steps.
Read MoreWelcome to the third government shutdown of 2018! Did you forget about the first two? In January, there was a three-day closure, and then in February, there was the one-day sequel. In both of those instances, investors shrugged off the news and stocks actually edged up during those days-long shutdowns.
Read MoreStocks dropped by about four percent on the week and the proximate cause was the strength of the economy. In the bizarro world of investing, here’s how the reasoning goes: When the economy is expanding, the Federal Reserve has to increase short-term interest rates to ensure that inflation does not eat away at growth. That part has been built into most analyst assumptions, but only recently have we seen yields on 2, 5 and 10-year government notes start to climb. During the week, the 2-year spiked to the highest level in a decade and the 10-yr hit its top level in seven years.
Read MoreIf you feel like things are more expensive, you are right. Despite a slightly weaker than expected inflation report in April, this year, prices have accelerated faster than Fed officials anticipated just a few months ago. Last week we learned that headline inflation increased to a 14-month high of 2.5 percent from a year ago in April, due in large part to rising gas prices. Excluding food and energy the core rate increased by 2.1 percent.
Read MoreWelcome to the stock market roller coaster! It’s a bit jarring, especially on the heels of the tranquil 2017 merry go round, but as the bull market in stocks enters its tenth year, volatility abounds. Investors probably feel a bit of relief that the major indexes finished the first three months of the year with relatively small losses (Dow down 2.5 percent, the S&P 500 dropped 1.2 percent and the Russell 2000 was off 0.4 percent) or gains (NASDAQ up 2.3 percent, despite a 9.5 percent drop in Facebook) but that’s like saying the roller coaster ride ended in the small place that it started: what happened in between is where the action occurred.
Read MoreStocks dropped by nearly 3 percent Thursday and another 2 percent on Friday, closing out the steepest one-week percentage decline for US indexes since January 2016. The proximate cause was President Trump's announcement that the U.S. would levy 25 percent tariffs on up to $60 billion dollars worth of Chinese imports.
Read MoreWhat better way to celebrate the ninth anniversary of the bull market than with a strong employment report? The economy created a better than expected 313,000 new jobs in February, higher than the anticipated 200,000. The strength was seen across a variety of sectors: retail increased by 50,300, construction was up 61,000, manufacturing added 31,000 jobs and professional & business services employment added 50,000.
Read MoreWorries about rising inflation have spooked stock and bond investors. As a reminder, inflation occurs when the prices of goods and services rise and as a result, every dollar you spend in the economy purchases less. The annual rate of inflation over from 1917 until 2017 has averaged just over 3 percent annually. That might not sound like much, but consider this: today you need $7,272.09 in cash to buy what $1,000 could buy in 50 years ago.
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