WASHINGTON, October 11, 2017 – All three major stock market averages were up yet again today. But stocks are feeling awfully toppy this week, given the quiet selling we see just underneath the surface this surprisingly sustained but possibly deceptive fall rally.
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Interest rates, or speculation about the future path of interest rates, headlined Wednesday’s market news reports. Also in the headlines: a pair of meaningful statistics that might encourage the Fed to post one final interest rate hike before the end of the calendar year, according to CNBC:
“The surprise 33,000 decline in nonfarm payrolls was largely written off as a storm-driven anomaly. What has gotten a bit more traction, though, is an acceleration in wage growth, from a middling 2.5 percent annualized gain in August to a more robust 2.9 percent move in September.
“Given that the Fed believes 2 percent inflation is healthy, and that the biggest concern has been the lack of wage pressures, the news helps provide some certainty about the pace of growth.
“‘The FOMC should key in on the lower unemployment rate, and rising average hourly earnings and labor force participation as the signal on whether to raise interest rates again in December,’ said Scott Anderson, chief economist at Bank of the West. ‘I expect Federal Reserve officials to maintain their hawkish bent.’”
Almost entirely dismissed in August, the probability of a final 2017 interest rate hike is back on the table again, with analysts and economists rating the odds for a December hike close to 90 percent at this point.
Both the Dow and the broader-based S&P 500 were up nearly 0.20 percent Wednesday, not impressive on a day-by-day basis, but still good enough to add to the “melt-up” tendency of October’s markets thus far.
But Wednesday’s champ was the tech-heavy NASDAQ, up 0.25 percent after some weakness earlier this month. The success (or failure) of Apple’s (symbol: AAPL) newly-introduced iPhone 8 models and its upcoming (and costly) iPhone X units has largely been keeping the NASDAQ in line, given Apple’s influence in that average as well as the shares of the many companies that supply components for various iPhone models.
Also influencing trading action at least peripherally is the big push by the Trump Administration on tax reform. Republicans desperately need a win here to retain any credibility in the 2018 elections.
But the willingness of the RINO and Tea Party factions of the GOP to bury the hatchet for once and actually get something substantial done in 2017 remains to be seen.
Having lived in Washington now for the better part of 50 years, this writer is still gravely concerned that the Republicans will continue working to retain and enhance their longstanding title as the Stupid Party. They have less than 3 months remaining this year to prove me wrong.