The Stock Market
– Where To Now?

by Ian Harvey

February 11, 2019

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Expect the stock market to go higher this year with plenty of speed bumps along the way. There is likely to be a pullback of 3 or 4 percent within the short-term, but the stock market will again pick up steam.

This rally will be helped along by the Federal Reserve monetary policy. The central bank had been gradually raising interest rates but in January it opted not to raise rates and indicated it would take a "patient" approach going forward.

There may even be a decision to reverse rates if the weakening global growth starts to cause problems within the United States – which will be great for the stocks to push higher.

The January performance this year saw the U.S. stocks move up sharply, the best in 30 years. Improving market sentiment since the beginning of 2019, after a period of gloomy market sentiment in the final three months of last year, has helped the Dow Jones Industrial Average jump more than 7 percent.

The major causes behind this market gloom have been U.S.-China trade tensions, Brexit uncertainty and fears about global growth.

As to the near future in relation to likely factors affecting the stock market are…..

  • U.S. Futures Point to an Upbeat Open for the stock market.
  • U.S.-China Trade Talks resume with the two sides trying to hammer out a deal ahead of the March 1 deadline when U.S. tariffs on $200 billion worth of Chinese imports are scheduled to increase to 25% from 10%.
  • Another Government Shutdown Pending - lawmakers in Congress have until Friday to agree on a budget deal to avert another partial shutdown.
  • U.S. Dollar Hits 2019 High - pushed higher against its major rivals, hitting its best levels of the year, as lingering fears over the outlook for global growth drove appetite for safe-haven assets.
  • Fed Speakers – will get trader attention looking for further insight on interest rates.
  • U.S. Inflation – if inflation is weakening then there will likely be more expectations that the Federal Reserve will need to slow its pace of rate hikes next year.
  • U.S. Retail Sales – will provide further signs on the strength of the American consumer.
  • Earnings Season Begins to Wind Down - There are about 60 S&P 500 companies reporting results in the week ahead, as the earnings season on Wall Street starts to wind down.

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Ian Harvey
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