market commentary

Some good news is starting to trickle in on the economy. Specifically, recent weeks have seen a pickup in vehicle demand, further uneven improvement in manufacturing activity, gains in the services sector, and a rise in exports.

The economy is facing some challenges. Specifically, after last year’s stellar third quarter, in which GDP surged 33.4%, growth slowed to 4.0% in the final three months.

President Biden faces daunting challenges as he begins his term. First, there is the need to address the sharp divisions that weigh on our country, spotlighted by the former President’s second impeachment trial. Second, there is the fight against COVID-19. That disease has claimed more than 400,000 U.S.

The stock market remains on a rollercoaster, headlined by dramatic selloffs followed by impressive comebacks. Through it all, the indexes remain fairly near their all-time highs.

Stepped-up volatility has become the order of the day on Wall Street, something that had not been the case for much of this year.

The economy is stumbling out of the gate this year, with the painful government shutdown, a sudden drop in existing home sales, and a marked downturn in consumer sentiment behind much of this early 2019 slowdown. Of course, the big story is the shutdown.

Earnings reporting season is well under way, with expectations for the recently ended fourth quarter still quite positive. In all, forecasts call for another double-digit percentage rise in S&P 500 earnings, as companies capitalize on recent economic gains.

Wall Street is keeping a closer eye on the Federal Reserve, especially after its policy making committee suggested it would resume hiking borrowing costs rather soon. The Fed cited continued strong economic growth and a persistently low jobless rate as arguments for raising rates at its December meeting.

The often turbulent month of October has come and gone, and once again, it lived up to its reputation. True, the selloffs were not historic, in the mold of those suffered in 1987 and 2008. And there were intermittent rallies, some quite impressive. Still, there was considerable pain inflicted, as the indexes fell sharply during the 31-day span.

The Federal Reserve is assuming a more restrictive monetary stance, an adjustment that is leading to steadily rising interest rates. And that is not sitting well with investors.