Record stock market highs retreated as January came to a close. U.S. stocks tumbled toward the end of the month, with the Dow Jones Industrial Average (DJIA) edging back from its much-touted record high above 20,000. The broad-market S&P 500 also retreated, while bond yields remain unchanged for the most part. In the end, the three major domestic stock indices ended slightly up for the first month of the year.
January 25, 2017
In many cases, the amount of attention something gets is inversely related to how important it actually is to the markets. In other words, the more the media and weekend investors talk about something, the less impact it generally has on stock prices. The Dow Jones Industrial Average hitting the 20,000 milestone is a perfect example of this phenomenon, and it likely will not matter much in the long run.
Written by: Stephen Auth, CFA (Chief Investment Officer, Equities, overseeing all of Federated’s equity and asset allocation products globally).
Traditionally, bull markets climb a Wall of Worry. Anxieties about what could go wrong keep expectations low, valuations under control and cash on the sidelines. As the data comes in less-worse than forecast, the mountain of cash set aside due to the wall of worry gradually seeps into the market, fueling the advance. Since the lows in 2009, this secular bull has followed this classic market pattern.
Enjoy the latest Measuring Success Newsletter — with important dates, tax season tips, and our market and economic outlook for this “passing of the baton” year. Click here to read.