Looking Back at February
January and February have been very productive months for the market. Most US companies have reported earnings for last quarter. In general, while not as robust as last year, they are positive. The Federal Reserve (Fed) has decided to keep interest rates where they are for the moment, while continuing to watch how the economy progresses.
Looking Ahead to March
Even though there are several positive factors that may affect the markets, they cannot continue their upward path at this momentum.
Trade talks with China are moving along. It appears that a trade deal will happen. This will help the market sustain its direction. If there is a trade deal with China, many investors who have resisted buying into the market, may begin to buy again, which would also cause the market to go higher.
Conversely, there are concerns. Some of our economic data (indicators like interest rates and retail sales) has begun to weaken and this could cause a slide in the market. The increases in interest rates already in place have caused the housing market to weaken slightly and there has been a drop in retail sales. Both are extremely important to our economic growth.
Interest rates have stabilized and may even drop slightly toward the end of the year. As we begin to plan for future market movements, we are integrating some of our current portfolios with additional dividend stocks, such as utilities, and/or bonds, when we feel it is necessary.
We are keeping our eye on events that may influence the market, such as the tariffs and interest rates, as well as the housing market. As investors, not traders, we continue to look further into the fall and 2020.
We do feel that the market will soften eventually, which is why it is important that portfolios are balanced. We will continue to closely monitor developments with the economy, as well as global events that can affect the market.