If investors had any concerns that 2017’s strong equity market returns had the ability to carry over into 2018, I think it’s safe to say that they’re probably gone now. The S&P 500 set its 14th all-time high of the year on Friday, and we’re not even to the end of January yet. The Dow and S&P 500 are up more than 7% on the year, and the Nasdaq is up nearly 9%.
Market watchers Friday were hoping for a third straight quarter of 3% annualized GDP growth. While they didn’t get their wish (the final number came in at 2.6%), there was a lot to like in the report. Consumer spending, construction and investment all showed strong gains. The data did, however, suggest a pickup in inflation, which should cement another rate hike come March. The Fed futures market has priced in a roughly 80% chance of a hike, but the latest data should help push that closer to 100%.
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