S&P 500 Hits Record High: Market Analysis & Federal Reserve Outlook

US stocks continued to show strength, finally erasing losses from declines in January and February. The S&P 500 reached a new all-time high on Friday. Chairman of the Federal Reserve Jerome Powell conveyed a positive outlook on the US Economy, referencing income and job growth, and indicating that the central bank plans to continue to raise rates. As has been the case for much of the year, political events dominated headlines as two former Trump associates Paul Manafort and Michael Cohen were convicted of or plead guilty to various felonies. Internationally, mid-level trade talks with China failed to produce any notable progress and tensions continue.

Weekly Returns

S&P 500: 2,874.69 (+0.86%)
FTSE All-World ex-US (VEU): (+1.70%)
US 10 Year Treasury Yield: 2.82% (-0.05%)
Gold: $1,205 (+1.80%)
EUR/USD: $1.162 (+1.60%)

Major Events

• Monday – President Trump expresses discontent with the Federal Reserve’s plan to continue to raise rates, Chairman Jerome Powell defends the Fed stating its intent is to operate independently of political influence.
• Monday – Pope Francis expresses shame over the Pennsylvania report on sex abuse.
• Tuesday – Andrew Wheeler, acting head of the EPA signs a proposal to undo Obama-era environmental rules related to coal plants.
• Tuesday -Paul Manafort is convicted of 8 of 18 counts related to tax and banking fraud.
• Wednesday – The S&P 500 reaches a new intraday high, extending the bull market to become the longest in history, producing more than 400% in total returns since it began in 2009.
• Thursday – New home sales disappoint and suggest a slower summer.
• Friday – S&P 500 closes at an all-time high, along with the Nasdaq Composite and the Russell 2000 (Small Cap Companies).
• Friday – Federal reserve Chairman Jerome Powell indicates future rate raises to come if the economy continues on this path.

Our Take

As has often been the case recently, political issues continue to dominate headlines. We believe that it is prudent to separate the noise from the news. The S&P 500 closed at a new all-time high to finish the week, sparking fresh concerns and calls from the bears that the bull market continues to age. At times like these it is important to take stock of your portfolio and make sure that you are comfortable with your risk tolerance, but not try to time the market. Bull markets do not die of old age and political noise is nothing new to this bull market, which has overcome Brexit and continual rate raises. Economic data continues to point to expansion in the US.

Trade discussions and geopolitical tensions remain top of mind and could continue to create volatility in the short term, potentially providing opportunities for rebalancing. It is important to remember that this volatility and uncertainty may impact portfolios in the near-term, but it does not necessitate a change in long-term strategy.