The markets closed out the week with mixed results following the Commerce Department’s release of the fourth quarter G.D.P. report. The Dow Jones Industrial Average (chart) finished the day down 74.17 points, the S&P 500 (chart) -2.11 with the Nasdaq (chart) and the Russell 2000 (chart) both eking out modest gains.
According to this mornings G.D.P. report, the U.S. economy grew at a 2.8% annualized rate in the fourth quarter coming in short of certain economists expectations. This seemed to affect the Industrials throughout the day and caused some apprehension as to the growth estimates going forward. Also, the Federal Reserve came out this week and said they expect short-term interest rates to stay near record lows at least through 2014. To me this is an indication that the Federal Reserve still sees an anemic economy well into the future, which might not bode so well for equities going forward. Couple that with earnings reporting season beginning to wind down and there doesn’t seem to be any near term catalyst in the markets to continue to propel stocks.
That said, momentum is a very powerful dynamic to the upside or downside and certainly equities have been on a tear as of late with the bulls in full control. However, it’s probably not a good idea to get too complacent and think that stocks can go up forever as we all have learned. At the very bare minimum this market is seemingly poised for a pullback which actually could be very healthy for a sustainable uptrend. My concern is that one big sneeze out of Europe or if the most recent positive economic data here in the U.S. was just an anomaly, we could be in for more than just a “healthy pullback”? Good luck to all.
Have a great weekend 🙂