The S&P 500 was volatile this week as the tug of war between bulls and bears created intra-day moves of 2.5%. Even with the volatility, the S&P 500 was able to post its first positive week snapping a three-week losing streak closing at 4431 Friday. A technology comeback began Monday when we saw the S&P 500 drop to correction territory (drop 10% from January 3 record) but then closed in the green. A similar story for the NASDAQ and DJIA on Monday with a 4% move and a 1000-point recovery respectively. On Wednesday, the Federal Reserve indicated that it will raise interest rates in March for the first time in three years. Fed Chair Powell said that there "is quite a bit of room" to raise interest rates before negatively impacting the labor market. This was supported by the Commerce Department's report of personal consumption expenditures (CPE), the Fed's preferred inflation gauge, coming in with a 4.9% jump year over year for December. This is the hottest CPE report since September 1983. From a technical perspective, the S&P 500 crossed below its 200 day Moving Average on 21 January and has closed below that level every day this week, even given Fridays nice rally. Also, from a broader view, 55% of S&P 500 stocks were trading below their 200-day moving average as of Thursday. For TSP TIPS, all three equity funds still look weak with the C fund being the only one which has its 50 day Moving Average above its 200 day Moving Average. As such, we recommend no changes to our current allocation.
The S&P 500 was volatile this week as the tug of war between bulls and bears created intra-day moves of 2.5%. Even with the volatility, the S&P 500 was able to post its first positive week snapping a three-week losing streak closing at 4431 Friday. A technology comeback began Monday when we saw the S&P 500 drop to correction territory (drop 10% from January 3 record) but then closed in the green. A similar story for the NASDAQ and DJIA on Monday with a 4% move and a 1000-point recovery respectively. On Wednesday, the Federal Reserve indicated that it will raise interest rates in March for the first time in three years. Fed Chair Powell said that there "is quite a bit of room" to raise interest rates before negatively impacting the labor market. This was supported by the Commerce Department's report of personal consumption expenditures (CPE), the Fed's preferred inflation gauge, coming in with a 4.9% jump year over year for December. This is the hottest CPE report since September 1983. From a technical perspective, the S&P 500 crossed below its 200 day Moving Average on 21 January and has closed below that level every day this week, even given Fridays nice rally. Also, from a broader view, 55% of S&P 500 stocks were trading below their 200-day moving average as of Thursday. For TSP TIPS, all three equity funds still look weak with the C fund being the only one which has its 50 day Moving Average above its 200 day Moving Average. As such, we recommend no changes to our current allocation.