Investment Commentary –January 30th, 2018

Market Indices as of Market Close January 30th, 2018

Dow 26,076 (5.49%)
S&P 2,822 (5.57%)
NASDAQ 7,402 (7.23%)
Gold $1,341 (2.39%)
OIL $64.21 (6.75%)
US 10Y Treasury 2.71 (30.92%)
Barclay Bond Aggregate (-1.08%)

How the stock market has reacted to State of the Union speeches

President Donald Trump is preparing to lay out his second-year agenda to Congress, and if past is prologue, the stock market will like the sound of his speech.

Trump is due to give his first State of the Union address on Tuesday at 9 p.m. Eastern. The last time Trump spoke to lawmakers from the House chamber — in a State of the Union-like address to a joint session of Congress — the Dow Jones Industrial Average DJIA, -1.37% broke through 21,000 the day after.

That day’s increase in the Dow ushered the then-new commander-in-chief into an exclusive club. Since 1961, the Dow has made gains of more than 1% on the day after State of the Union addresses or similar speeches by presidents only five times. The day after Trump’s first address to lawmakers was one of those days, with the average climbing 1.46%.

Around the web

Fed transition

The U.S. Senate confirmed Jerome Powell as the next chairman of the U.S. Federal Reserve, although he won’t assume that post until after the Fed’s next policymaking meeting, which opens on Tuesday. The two-day meeting will be the final session led by Janet Yellen, who became chair in 2013. Board members are expected to keep interest rates unchanged—for now.

Modest slowdown

The U.S. economy exited 2017 with a solid fourth-quarter GDP growth rate of 2.6%. However, the figure was below most economists’ expectations for growth of around 3.0%, and it lagged the prior quarter’s 3.2% figure.

Dollar volatility

It was another volatile week for the U.S. dollar, which at one point fell to its lowest level in three years as measured against major foreign currencies. Some of the volatility was triggered by public comments from Treasury Secretary Steve Mnuchin and President Trump, as some investors perceived they were sending mixed messages about the administration’s currency and trade policies.

Upcoming events


U.S. Federal Reserve Board opens two-day policy meeting

Past week’s winners: Healthcare, Services

Past week’s laggards: Consumer goods, Basic Materials

Other Notable Indices (YTD)

Russell 2000 (small caps) 4.11%
EAFE International 5.89%
EAFE Emerging Markets 9.45
Shiller Cape US (Annuity) 5.85

The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.