Daily Dispatches
The New York Stock Exchange on Thursday, Dec. 12
Associated Press/Photo by Richard Drew
The New York Stock Exchange on Thursday, Dec. 12

Dollars and Sense: All is calm, all is bright on Wall Street


Good news still bad news. The stock market struggled this week. Last Friday, a stronger-than-expected November jobs report sent the markets soaring. Then Monday it went up a bit more. I was beginning to think we might actually have come to the end of the bad-news-is-good-news era in which bad economic news means the Federal Reserve will likely continue its bond-buying program, which is temporarily good for the markets. I’m not saying that era is over, but it’s now clear that last Friday’s surge was a spike rather than a trend. The Dow Jones Industrial Average has given back about a month’s worth of gains to fall to where it was in early November. Of course, it has been a very good year for the stock market. The major indexes are up in the 25-percent range. And even this week’s retreat has been relatively modest; trading has been pretty light, so this slip is not a crisis.

D.C. speaks. Washington once again made some economic news. Early in the week banks got some clarity on new regulations. The Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and other federal agencies approved the so-called Volcker Rule, which will go into effect by July 2015 for the nation's largest banks. The Volcker Rule says banks can’t trade their own accounts, a practice that contributed to the bank crisis of 2008 and 2009. Approval of the Volcker Rule sent bank stocks higher.

The week ahead. One of the few remaining events on the economic calendar for this year is the Federal Reserve’s two-day policy meeting next week. The Fed is expected to begin winding down its stimulus program in the coming months, but few investors expect it will begin the process until after the first of the year. The Fed could end up giving more guidance about precisely when that tapering will occur. That said, if there’s no big news from the Fed, most analysts think the rest of the year will be quiet. There’s a bit of portfolio adjusting going on now in response to year-end tax planning and major brokerage houses getting ready to send out year-end statements to their clients. Other than that, most analysts expect things to just drift until the end of the year. Here’s hoping.

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Warren Cole Smith
Warren Cole Smith

Warren is vice president of mission advancement for The Chuck Colson Center for Christian Worldview and the host of WORLD Radio’s Listening In. Follow Warren on Twitter @WarrenColeSmith.


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