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Stock Market Has Best January in 30 Years; Propelled by Banks & Smaller Companies

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The stock market had its best January in three decades, propelled by banks and smaller companies. What that tells those in the economic know is that investors like putting their money into sectors that are connected to the national economy.

           “Those groups were among the biggest laggards during the fourth quarter’s steep slide, “according to The Wall Street Journal. “Their reversal suggests that investors who were bracing for a sharp slowdown in U.S. economic activity have been soothed by cautious comments from the Federal Reserve, signs of strength in the labor market and data pointing to tepid inflation.”

Last week, the Fed’s chairman, Jerome H. Powell, signaled that its move in the direction of higher interest rates will probably come to a halt.    “The case for raising rates has weakened somewhat,” Powell said at a press conference, pointing to slowing inflation and growth in Europe and China. “My colleagues and I have one overarching goal, to sustain the economic expansion.”

“The flexibility that the Fed has telegraphed buys us a little more time to perhaps prolong this cycle,” said Wasif Latif, head of global multi-asset investing at USAA Asset Management, to the Journal. “This is more a reaction to interest-rate policy as opposed to economic data clearing the path for the market. That’s still up in the air.”

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           While quick to pooh-pooh any good news about the Trump economy, CNN praised the gains made last month. “The last time stocks did this well in January, Tom Brady was a tween and Los Angeles Rams coach Sean McVay was a toddler. The S&P 500 and the Dow are each up more than 7% this month. Those mark the biggest gains since January 1987 and January 1989, respectively. The S&P 500 had its best monthly overall gain since October 2015, according to Jodie Gunzberg, head of US Equities at S&P Dow Jones Indices. It’s an amazing turnaround for the market considering that December was the worst month for stocks in nearly 90 years.”

           “History shows that the market follows January’s direction most of the time, so with the best January in three decades, 2019 should be a good year for stocks,” noted MSNBC. “However, skeptics say that setup was similar in 2018, but the stock market sold off into the end of the year and the so-called January barometer failed. There is a big difference between this year and last, with the market bouncing back off a steep loss, boosting January’s performance while January 2018 was the start of a correction.”

           As Bank of America Corp. Chief Executive Brian Moynihan said during his firm’s January 16 earnings call, “Our view is through our customers, and this strongly supports a solid growth view.”

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