September 13, 2016

Stocks Drop on Interest Rate Worries

Stocks Drop on Interest Rate Worries (WEEKLY UPDATE – SEPTEMBER 12, 2016) Stocks Drop on Interest Rate Worries, After trading flat for most of the week, stocks broadly sank Friday on fears of a future rate hike. For the week, the S&P 500 lost 2.39%, the Dow fell 2.20%, the NASDAQ dropped 2.36%, and the MSCI EAFE lost 0.16%.[1] Monetary policy was at the forefront of investors’ minds last week as they continue to calculate the odds of an interest rate increase ahead of the September Federal Reserve’s Open Market Committee (FOMC) meeting. The European Central Bank (ECB) declined to increase its stimulus program, voting to stand pat on interest rates and current bond-buying activity. The decision wasn’t a total surprise as the Eurozone economy has proved resilient after Britain voted to exit the EU. However, the ECB did confirm that it will consider further quantitative easing in 2017 if conditions worsen.[2]  No exit date for Britain has been announced, though the new prime minister has indicated it will not begin before next year.[3] On our side of the Atlantic, surprise comments by a voting member of the Fed increased speculation that a rate hike may come this month.[4]  When […]
August 23, 2016

NASDAQ Posts Eighth Week of Gains

NASDAQ Posts Eighth Week of Gains WEEKLY UPDATE – August 22, 2016 The S&P 500 and Dow ended last week slightly lower, but the NASDAQ posted an eighth straight week of gains for the first time since 2010.[1] For the week, the S&P 500 lost 0.01%, the Dow fell 0.13%, the NASDAQ gained 0.10%,and the MSCI EAFE lost 0.64%.[2] What is the Fed thinking? Minutes from the July Federal Reserve Open Market Committee meeting showed that officials are split about the economic outlook and when to raise interest rates. Hawkish rhetoric from Fed members who favor a rate hike soon could push the central bank into raising rates as early as September. More dovish officials aren’t convinced that tepid inflation will rise to the Fed’s 2.0% objective and favor a wait-and-see approach to raising interest rates.[3] After several months of strong labor market gains, some economists think the economy is close to full employment and central bankers should move soon to put on the brakes by raising interest rates. If the economy gets overheated, prices could rise too much and push the economy into a boom/bust cycle that federal officials are anxious to avoid. While a few years of outsized growth […]