The US economy is gearing up for a promising year with advances across the board. Trump’s bold plans to revive America has set the stage for record advances by stocks & bonds. This increased optimism helped U.S. stocks rise towards record levels, while the dollar erased losses. Treasuries slipped as financial shares climbed in the wake of improved retail sales. As the U.S. economy blossoms, the reaction was mixed in Europe. This sentiment was mirrored in commodities as gold soared & oil slipped. All these stark contrasts are paving the way for an extremely interesting year.
U.S. Stocks Hit New Heights as Commodities Conflict
“Since Trump was elected expectations were set very high,” said Andrzej Pioch, who helps oversee $1.3 billion as a money manager at Legal & General Investment Management Ltd in London. “Now we need to see some evidence in the hard data to support that. We expect the earnings to be modestly up but a lot of positive news is already priced in.”
Now that Trump has promised growth with his new spending agenda, the heat is on. Recently trade briefly stalled as experts worried that Trump’s proposals wouldn’t deliver results. Further speculation was sparked by the Federal Reserve’s hints that faster growth would force them to lift rates higher. Even in the face of uncertainty, things still seem to be on track.
U.S. stocks are back with a vengeance, pushing the Dow Jones Industrial Average above 19,900. This feat was barely pulled off as the S&P 600 pared a weekly side. This tapered off its all-time high that was set on Friday. After the dust had finally settled, the S&P 500 gained 0.2%. This put them 1 point shy of the January 6th closing record. For the rest of the week the index is flat.
What helped fuel this recovery was big gains from some of the industry’s major players. Improving retail sales helped Bank of America Corp. gain a whopping 1.2%. This heroic rebound was mirrored by Wells Fargo & Co, who experienced a 1.1% increase. As sales in the U.S. continue to bolster, the growing potential of America’s spending power is being showcased.
After experiencing a brief hiccup, the dollar is back on the rebound. Against all odds, the Bloomberg Dollar Spot Index reported a 0.1% gain. This was welcome news after Thursday’s 0.5% slide, which placed the dollar at a 1 month low. In total the gauge is down 0.6%, but despite this recent slide it’s still on track for a comeback.
Commodities are experiencing increasingly mixed reactions to Trump’s bold plans. Gold continued a 5th day set of gains, which put it at its highest closing price since the presidential election. Recently gold enjoyed a 0.3% bump, leaving it at $1,198.18 an ounce. While gold reveled in its third weekly gain, oil took a loss after a monumental two day increase. Saudi Arabia’s promise to cut output even more than OPEC requested sent crude below $53 a barrel. West Texas Intermediate crude lost 0.6%, leaving it at $52.72 a barrel.
As America experiences renewed patriotism, the financial market is cautiously playing along. Growth in commodities & stocks is backing up the optimism. The only mystery is how long this bullish mentality will last.