Stocks pushed higher in January, fixed income struggled, and the global macroeconomic and political picture remained murky. Our Capital Markets Strategists team of Dr. Brian Jacobsen, CFA, CFP®; John Manley, CFA; and James Kochan examine these developments and more in their latest Market Roundup. From the team:
Despite being the shortest month of the year, February is chock-full of holidays, including Groundhog Day, Mardi Gras, Ash Wednesday, Valentine's Day, Presidents Day, and perhaps others. This year, February could also be full of milestones. Major market indexes entered the month running up to highs not seen since October 2007, leading many commentators to question whether these levels can be sustained. To put this into perspective, corporate earnings have surpassed their 2007 highs, and the Federal Reserve's (Fed's) balance sheet is larger than it's ever been. It's also important to note that, adjusting for inflation, the S&P 500 Index would have to be above 1,700 to surpass its October 2007 high. While we think the levels are justified, that doesn't mean the markets will remain at or above them. Rather, it simply means we think there is long-term value in equities even at these elevated levels. However, feeling excitement or contentment with fixed income at this point seems harder to justify.