Fed Actions Are Driving Markets
Published Wednesday, December 31, 1969 at: 2:00 PM EST
It's notable that the stock market in 2019 has not suffered a 10% correction on worries about the China trade confrontation, the manufacturing slump or concerns about the U.S. political situation — three bad-news narratives currently haunting markets.
But look at this: The three major stock market drops in the past year were all related to the Federal Reserve Board's actions.
Since the Fed backed off its forecast for rising rates and inflation in January, consumer spending and income have been about as strong as they have ever been in post-War American history!
For months now, the actions of the Federal Reserve, as it works to extend the economic expansion into 2020, have driven the stock market — both up and down.
The point is, it's always been wise not to get emotional about the news affecting markets that may seem so dismal at any bleak moment in history.
This is the longest business cycle in modern history, and it is sustainable as long as the Fed does not make a policy mistake, which is always possible.
A Fed mistake in December of 2018 caused the inversion of the yield curve!
Fortunately, the Fed quickly recognized its mistake and has eased rates twice by a quarter-point since then.
The Fed is what matters most in the current situation.
This article was written by a veteran financial journalist. While these are sources we believe to be reliable, the information is not intended to be used as financial or tax advice without consulting a professional about your personal situation. Tax laws are subject to change. Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. No one can predict the future of the stock market or any investment, and past performance is never a guarantee of your future results.
© 2021 Advisor Products Inc. All Rights Reserved.
- Navigating Required Minimum Distributions
- Four Retirement Income Withdrawal Methods
- Education Tax Credits Primer
- Two Overlooked Surprises Of 2019 To Track In 2020
- How Negative Yields In Europe Could Drive Stocks Higher
- Will Negative Rates Abroad Boost U.S. Stocks?
- Tax Law Changes Delayed But Not Dead
- About The Weakness In Manufacturing
- Is The Inverted Yield Curve The Financial Fakeout Of 2019?
- Retirement Income Alert: Do You Own A $1 Million Plus IRA In A High Income-Tax State?
- How Can We Help You Die In Peace?
- A Primer On Setting Up A Trust Fund
- Three Strategic Mid-Year Tax Tips
- How To Avoid State Income Tax On Distributions From IRAs
- Watch The Fed Closely In The Months Ahead