Stocks finished modestly higher on the week as volatility persisted: in three of the four trading days, the S&P 500 moved by more than 0.5%, including a 1.6% rally on Friday. Rising interest rates and other economic policy uncertainties are likely to result in more episodes of market volatility, including big stock market moves both up and down. Improving fundamentals, including economic and earnings growth, can support rising stock prices over time, both here and in the rest of the world. You can’t control market volatility, but you can control the actions you take to stick to your long-term investment strategy.
There was no shortage of market moves in last week's holiday-shortened session. All told, Canadian stocks were higher as oil prices rallied, and U.S. stocks posted modest gains, breaking the recent trend of sharp swings which produced the worst week in two years and the best week in five years in succession. The dust has appeared to settle a bit, but volatility is likely to persist as markets adjust to evolving economic and interest rate conditions. To that end, last week's action produced the following three takeaways:
Craig Fehr, CFA
Sources: 1. Bloomberg, average daily price change in the S&P 500 index. 2. Bloomberg, S&P 500 total return, S&P/TSX Composite total return. 3. Bloomberg, based on 91% of S&P 500 companies that have reported fourth-quarter results. 2018 estimates based on Bloomberg consensus for the S&P 500.
|S&P 500 Index||2,747||0.6%||2.8%|
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Following a holiday-shortened week that featured very little economic data, reports next week include the Finance Minister publishing the federal budget on Tuesday, Manufacturing PMI on Thursday, and the GDP report for the fourth quarter on Friday.
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