With a country that seems divided by political lines, there is one thing nearly everyone can agree on: things under President Trump have been anything but uneventful. The President wasted little time in the first days of his term. Beginning with an executive order intended to start the process of repealing Obamacare, President Trump continued with executive orders and presidential memorandums covering a variety of issues including a government hiring freeze, immigration reform, energy reform, and deregulation.
Visitor passes at the White House are in heavy use as President Trump continues to meet with business leaders and executives across a number of industries, including Health Care and Automotives. The Trump administration’s first days in office have also come with opposition, as protesters flooded the streets of Washington DC over inauguration weekend and continued with demonstrations in airports around the country in response to his order that, among other things, bars refugees from seven countries from entering the United States for 90 days.
In response, markets have edged higher since the inauguration with the hopes of a pro-growth agenda focused on corporate tax reform and deregulation, although the road has been a bit choppy so far. Needless to say, the President and his new administration continue to dominate the news cycle.
As the country and the media focus on everything coming from the White House, a flurry of economic data released during the month seemed to take a back seat in the headlines. Results were mixed, yet mostly positive, for the economy. Corporate earnings have shown a strong uptick and retail holiday sales numbers overall showed a strong increase year-over-year. The jobs number came in very strong for January, as 246,000 new jobs were added vs. estimates of 165,000. Consumer sentiment remains positive as well, evident by the slight decrease in the household savings rate. On the flip side, the first numbers for Q4 2016 GDP came in light at 1.9%, missing estimates, and overall GDP for 2016 came in at 1.6%, the lowest since 2011.
As the market expected, the Fed decided not to raise interest rates. Sentiment remains that the Fed will continue its cautious and reactionary approach to raising rates. Language in the minutes was in line with the January economic data, as the FOMC referenced a strengthening labor market and an economy that continues to grow, albeit at a “moderate pace”. However, inflation remained below the 2% target and the Fed opted to hold off on the first hike in 2017.
Despite 2 days of pullbacks to close the month, the markets closed off January in the green as the postelection rally continues on. The S&P 500 finished up 1.79% at 2,278.87 for the month. The Dow Jones Industrial Average finished 0.51% higher, including a 3 day stretch closing above the elusive 20,000 mark. It finished off the month at 19,864.09.The NASDAQ led the way in January, up 4.30%, and the Russell 2000, our gauge of the small-cap space, closed up 0.35%.
Emerging Markets finished up 5.48%. Growth outperformed Value to start the year as well.
We hope everyone is having a great start to 2017!
This market recap was written by Alex Penta, Capital Analyst Investment Research Team
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