Friends
The bulls took a wrong turn on the path to Dow 20,000 today as Janet Yellen and the Fed seem to have messed up their GPS system. Yes, everyone was quite certain that the Fed would raise rates a quarter of a point today, and they did, but perhaps the Fed’s crystal ball that see’s the likelihood of three rate hikes next year got market participants flustered. Of course, this is the same Fed that saw at least four rate hikes in 2016, and today’s was the one and only. At the press conference Fed Chair Yellen was asked about the Trump agenda and how it might affect Fed policy. The answer was simply that they, the Fed, would figure it out as it goes. Well, that’s what they’ve been doing forever, isn’t it?
As for today’s action, stocks were quiet right up until the Fed announcement. After the statement and during the press conference stocks swooped lower. Look, it certainly isn’t a bad thing to take a refreshing pause, even if you’re a raging bull. By the close, the Dow Jones Industrial Average was down 118 points to finish the day at 19,792. The S&P 500 was down 18 points to close at 2253. Gold was down $12 to trade at $1,147 per ounce, while oil was down $2.10 to trade at $50.88 per barrel WTI. Nat Gas was up $.092 to finish trading at $3.566. Not surprising, that the dollar strengthened while bonds weakened. The yield on the 10 year Treasury Note rose to 2.54%.
Really, nothing that the Fed did or indicated is a surprise. If the economy does strengthen we will see additional rate hikes. If the economy slips back into slow or no growth, then 2017 will look similar to 2016 with regards to Fed tightening – very little. Let’s see if we simply pause before continuing the trek towards Dow 20,000, or did the bulls finally run out of gas. Stay tuned.
Have a nice evening everyone.
