As corporate earnings dribble in and the results of the Federal Reserve’s next policy meeting are more than a week away, it’s a good time for a reality check across a few key areas:
Dow 27K! S&P 500 3K! NASDAQ 8200! Just months after the bull market in stocks and the current expansion each became the longest on record, U.S. equity indexes reached more milestones last week. Sure, the economy is expanding, but you can thank one person for the recent leg up in the bull market rally: Fed Chairman Jerome Powell.
In a week, the U.S. economy will celebrate its longest expansion on record (or at least since records were first kept in the 1850's). As of July, there will have been 121 consecutive months of growth, surpassing the 120 months of the technology boom of the nineties. (As a frame of reference, the average expansion lasts 58 months)
Was the fourth quarter of 2018 just a bad dream for investors? It sure looks like it now. With just two trading sessions left in the month, the S&P 500 is on track to close out the first four months of the year with its best results in 32 years (1987), has rallied more than 20 percent from the December lows, and has also bested its previous all-time high!
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.
December has been a rough month for investors, the kind of month that makes even the most battle scarred veterans’ hold their breath and hope for a sign that the worst is over. Sorry to say that there is never such a sign, which is why the saying “they don’t ring a bell at the top or at the bottom!” came into being.
Welcome 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.