thependulumswings

Friends

A plethora of less than stellar economic data finally put a little damper on the nearly 7 week rally. With interest rates extremely low and the Fed now firmly on the sidelines with regards to future rate hikes, the markets are going to have to decide going forward, if bad news is bad news for stocks or not. You know the drill, bad economic news guarantees an accommodative Fed therefore insuring that monetary policy is back to being a tailwind for stocks. With low interest rates, stocks become the only game in town, despite the fact that we are entering an earnings slowdown. This will be an interesting tug of war as we move towards the spring. Is bad news good news for stocks or not? Which is more important to market participants- dovish monetary policy/low interest rates or positive earnings growth?

As for today, by the close the Dow Jones Industrial Average was down 103 points to finish the day at 25,850. The S&P 500 was down 9 points to close at 2,774. Gold was down $19 to trade at $1,328 per ounce, while oil was down $.33 to trade at $56.83 per barrel WTI.

The bears finally had something to cheer about today, but I wouldn’t go so far as to say that they have claimed the high ground just yet. It is clear that the domestic economy as well as global economies are slowing, but what is not clear is what is more important to investors. Slow economies mean accommodative central banks around the world, and for about 10 years now, stocks have been the beneficiary (most of the time). Let’s see how the week finishes out tomorrow.

Have a nice evening everyone.

Jim