Week In Review: Stocks Pull Back On Political Headlines

It has been a very busy time in D.C. In the last few weeks, Trump placed tariffs on steel and aluminium, said he may hit China with tariffs, then replaced his: Chief Economic Advisor, The Secretary Of State, The Head of the CIA, and his National Security Advisor might be next.  If that wasn’t enough, the government placed sanctions on Russia for meddling with the 2016 election, and Special Counsel Robert Mueller subpoenaed the Trump Organization for his investigation (I might be missing a few headlines).

Normally, one would expect the stock market to be down considerably on just anyone of those headlines. Instead, stocks are barely budging. Instead, all the major indices are trading just below their record highs. That, ladies and gentlemen, is a very strong sign that the bulls are still in control of this market. Remember, it is not the news that matters, but how the market reacts to the news. The market only needs one or two big up days and we will be trading at new all-time highs again. Stepping back, the next big important levels to watch are 2018’s high (resistance) for the major indices and February’s low (support) for the market. Until either level is broken, by definition, I have to expect this sloppy sideways choppy action to continue. 

Monday-Wednesday Action:

Stocks opened higher but ended mixed as the market paused to digest the recent (and strong) two-week rally. In corporate news, Andrew Liveris announced he will step aside as executive chairman at DowDuPont in April. Jeff Fettig, co-lead independent director at DowDuPont, will take over the role. The Nasdaq continued to lead its peers as the big money continues to flow into tech stocks.

On Tuesday, stocks traded between positive and negative territory as traders digested a slew of big headlines. On the political front, President Trump fired Rex Tillerson as Secretary of State and promoted Mike Pompeo, Director of the CIA, to fill that role. Additionally, Trump blocked the Qualcomm acquisition by Broadcom which would have been the largest tech deal in history. Trump cited concerns of national security and QCOM fell hard on the news. Finally, inflation was tame as the consumer price index (CPI) grew by +0.2% in February, which matched estimates.