Dow Jones Industrial Average: 20,591.86 (-59.44, -0.29%)
Reflects changes in 30 well-known stocks (e.g. Apple, General Electric, IBM, Exxon Mobil). Daily movements of +/- 100 points are considered to be large.
S&P 500: 2,353.78 (-8.85, -0.38%)
Reflects changes in 500 stocks that includes large companies across all sectors. Because it consists of so many diverse companies, it is considered one of the best representations of how the stock market is doing. Daily movements of +/- 10 points are considered to be large
NASDAQ: 5,866.77 (-30.61, -0.52%)
Reflects changes in an index of more than 3,000 stocks that consists mainly of technology companies. Stocks such as Google, Amazon.com, and Microsoft are traded on the NASDAQ. Daily movements of +/- 30 points are considered to be large.
Trump expressed concern over the high value of the US Dollar…
Trump on Wednesday said that the US Dollar “is getting too strong” and when asked about Janet Yellen (chair of the Federal Reserve) Trump said “I do like a low interest-rate policy“.
Why do we care? Janet Yellen, chair of the Federal Reserve which sets interest rate policy, will see her term end in February 2018. Trump must decide whether or not to appoint her for another term, and during the campaign said he would “most likely” not do so and he criticized her for keeping interest rates low. This prior commentary created a view that, if Trump did not re-nominate Yellen he would appoint a new Fed chair who believed in higher interest rates, inherently a negative thing for stock prices. However, today’s comments mean that Trump may still re-appoint Yellen, meaning a continuation of current interest rate policy (which, although the Fed has been raising rates recently, they are still historically low and Yellen is viewed as wanting to keep them as low as possible to stimulate economic growth) and therefore, stability in the financial markets.
Those lingering geopolitical concerns…
Syria, Russia, North Korea, China – you name it. Obviously, these will not get resolved overnight and markets will remain nervous over any potential escalations. See the April 11 Coherent Finance daily market recap for some additional commentary.
Why do we care? As discussed in yesterday’s daily market recap, the uncertainty and nervousness around foreign policy is a negative for the stock market. Although some stocks and sectors may benefit, continued geopolitical concerns will weigh on the overall market. Also, Treasury yields continue to fall (see yesterdays recap – Treasury bonds are considered ‘risk free’ so investors buy them when there is fear in the markets) and the 10-year yield closed at fresh multi-month lows today.