Dec. 1, 2018
If you had been on a desert island for the month of November and returned just to see the last few days in the equities markets, you might have thought it was a ho hum month. Far from it. The gyrations of the past month have tested the commitment of long-term investors and those who sold out suffered the most.
Comments by U.S. Federal Reserve Chair Jerome Powell that interest rates were "just below" neutral propelled Wall Street higher on Wednesday, easing investor worries about the pace of interest rate hikes next year. Markets reacted favorably to the comments by Powell, who indicated there may not be as many future interest rate hikes from the central bank as was initially anticipated. Powel gave the markets exactly what they wanted, which was an admission that the previously proposed path of future rate hikes was probably too aggressive. U.S. President Donald Trump has recently been critical of the Fed for raising rates. The dollar retreated in value with potentially fewer rate increases on the horizon.
Hopes that the United States and China could call a trade war ceasefire at the upcoming G20 summit also helped stocks.
Despite Trump's tough remarks on the trade dispute ahead of Saturday's meeting with Chinese President Xi Jinping, the markets focused on comments by White House economic adviser Larry Kudlow, who indicated the two countries could call a truce. Reconciliation between the United States and China is seen as crucial, given that world growth and trade are already showing signs of a slowdown.
Year to date the Dow, S&P 500 and NASDAQ remain in positive territory at 3.31, 3.24 and 6.19 percent, respectively, while the 10-year Treasury is yielding 3.03 percent.