Keep an eye on what drives the equity markets such as the\nFed\u2019s actions, earning revisions and earnings growth. Focus on these\nfundamentals and more with our just released Stock Market Outlook Report. <\/p>\n\n\n\n
This report will help you stay focused on key economic\nindicators and base your investments on hard data. This 22-page report contains\nsome of our key forecasts to consider such as:<\/p>\n\n\n\n
- Will 2019 stay bullish or is a bear around the\ncorner?<\/li>
- Zacks global markets\u2019 outlook<\/li>
- What sectors show the best opportunity?<\/li>
- What industries within those sectors most merit\nyour attention?<\/li>
- Forecast for the S&P<\/li>
- Small-cap vs. large-cap returns<\/li>
- And much more.<\/li><\/ul>\n\n\n\n
If you have $500,000 or more to invest and want to learn\nmore about these forecasts, click on the link below to get your free report\ntoday!<\/p>\n\n\n\n
IT’S FREE. Download the Just-Released Stock Market Outlook<\/a>1<\/a><\/sup>\u00a0 <\/a><\/strong><\/p>\n\n\n\n
______________________________________________________________________<\/p>\n\n\n\n
Below, the chart and timeline can help bring light to this\nline of thinking. What you see is the S&P 500 over the last year, with\ncall-out dates indicating key Fed actions. <\/p>\n\n\n\n
S&P 500 over the\nlast 12 Months<\/strong><\/p>\n\n\n\n
![\"\"](\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/02\/MotM_chart_03272019-1024x396.png\")
<\/figure>\n\n\n\nSource:\nFederal Reserve Bank of St. Louis2<\/sup><\/em><\/strong><\/p>\n\n\n\n
September\n26 \u2013 The Fed raises the benchmark rate by a quarter point to 2% – 2.25%<\/strong><\/p>\n\n\n\n
Was it a coincidence that the Fed\u2019s interest\nrate hike corresponded nearly perfectly with the S&P 500\u2019s peak in 2018?\nHard to say, but the market no doubt aired its grievances with rising interest\nrates in the months that followed, with a ~20% decline that lasted until\nChristmas Eve. <\/p>\n\n\n\n
The Fed was arguably justified in its\ndecision to raise interest rates \u2013 unemployment was at 3.9% at the time, economic\ngrowth was humming along, and corporations were still experiencing double-digit\nearnings growth. 3<\/sup> The economy was strong enough to absorb higher\nrates, and the Fed was doing its job of trying to move rates back into the\nneutral \u2018zone,\u2019 in my view. The market did not seem to agree.<\/p>\n\n\n\n
December\n19 \u2013 The Fed raises rates again by a quarter point, to 2.25% – 2.5%<\/strong><\/p>\n\n\n\n
Economic strength showed few signs of\nweakening heading into the end of 2018, even though the market was experiencing\npronounced downside volatility. I wrote several times that the economy and\nstocks were telling two different stories at the end of 2018, and the Fed\u2019s\ndecision was based on the economic side of it. <\/p>\n\n\n\n
One silver lining to the Fed\u2019s decision in\nDecember was its forecast of reducing 2019 hikes to two versus the previously\nstated three. The\nlanguage in the Fed statement still called for \u201cgradual\u201d rate hikes, however, and\nreiterated that the U.S. economy was still growing at a strong rate. 4<\/sup>\nThe stock market\u2019s immediate response was to decline further, but market\nparticipants may have clung to Fed language of toning down the pace of hikes as\na positive development. <\/p>\n\n\n\n
January 30 \u2013 Fed pauses rate hikes, Chairman\nJerome Powell vows \u201cpatient\u201d approach<\/strong><\/p>\n\n\n\n
The tables began to turn when the Fed toned down their hawkish language a bit in December, but it wasn\u2019t long before the markets hit full stride when the Fed said \u201cthe case for raising rates has weakened somewhat.\u201d The market saw this statement as the Fed fully walking back its previous position, particularly since Powell added that the 2.25% – 2.5% fed funds rate was within a reasonable range of the committee\u2019s neutral rate estimate.5<\/sup><\/p>\n\n\n\n
The\nstock market responded in kind, and is arguably still locked into an uptrend\nthat is now just a few percentage points away from claiming a new all-time\nhigh.<\/p>\n\n\n\n
The Fed’s plan to pause interest\nrate increases, in this case and in statements that have followed, may have removed\na key headwind for stocks in what was already set to be a challenging year for\nstrong gains. <\/p>\n\n\n\n
Bottom Line for Investors<\/strong><\/p>\n\n\n\n
If the Fed does indeed\nremain on the sidelines for the entirety of 2019, I would argue that stocks\ncould actually post fairly solid gains for the year, assuming we also get\nbroad-based upside surprises in earnings growth and revisions to the upside.\nEarnings estimates have already come down considerably to start the year, so I\nsee this as a real, attainable possibility.<\/p>\n\n\n\n
That being said, investors should also keep in mind that once rates start going up again,\nparticularly this late in the cycle, we can reasonably expect corresponding downward\npressure on stock prices \u2013 much like we saw in September and December of 2018. For\n2019, it\u2019s all eyes on the Fed. <\/p>\n\n\n\n
To help you keep an eye on the Fed and other key economic indicators, we are offering you our <\/a>Just-Released Stock Market Outlook Report.<\/a><\/strong><\/p>\n\n\n\n
This Special Report is\npacked with newly revised predictions that can help you base your next\ninvestment move on hard data. For example, you’ll discover Zacks\u2019 view on:<\/p>\n\n\n\n
- Will 2019 stay bullish?<\/li>
- Zacks global markets\u2019\noutlook<\/li>
- What sectors show the best\nopportunity?<\/li>
- What industries within those\nsectors most merit your attention?<\/li>
- Forecast for the S&P<\/li>
- Small-cap vs. large-cap\nreturns<\/li>
- And much more.<\/li><\/ul>\n\n\n\n
If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!6<\/sup> <\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"
Reviewing a timeline of the Federal Reserve\u2019s statements and actions \u2013 and comparing them to equity market action \u2013 makes […]<\/p>\n","protected":false},"author":3,"featured_media":7430,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[63,71],"tags":[],"class_list":["post-7980","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitch-on-the-markets","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/7980","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=7980"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/7980\/revisions"}],"predecessor-version":[{"id":10773,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/7980\/revisions\/10773"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=7980"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=7980"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=7980"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}