This week saw a snap back towards the upside for the US capital markets after last week’s large losses. The major indices advanced more than 4% for the week, with the NASDAQ leading the way at 5.3%. The indices are back in the black for the year by around 2%, and the weekly advance was fairly evenly spread across sectors and market caps.
4th quarter 2017 results continue to come out strong, and the companies in the S&P 500 have earnings growth greater than 15% compared to the same quarter last year, with around 80% of companies reported. Commodities has a good week overall as well, with oil posting a 4% gain and settling at $61.65 per barrel.
In economic news, the Bureau of Labor Statistics reported inflation numbers which were ahead of expectations, and leading the ways was core inflation (which excludes the cost of food and energy) which was up 1.8% over the last 12 months. However, the numbers did little to slow down the weekly advance.
In political news, the Winter Olympics in South Korea continue to play out with no problems from the North Koreans. Special Counseler Mueller, charged with investigating Russian interference in the US Presidential election, handed down 14 indictments related to the investigation, most of which were against Russians in the US, but the issue appears to be of little concern to the capital markets, and not directly related to President Trump. However, news continues to come out about a payoff President Trump made (we now know through his attorney) to a former porn star, but the reason for the payment remains unclear. While this news is not something that would normally affect the markets, President Trump continues to be a wildcard, and should something happen to end his presidency early, the markets would likely respond negatively given the political uncertainty.
Overall, my outlook on the US capital markets remains positive and I continue to be fully invested.
Good luck,
Brian