Stocks opened sharply higher on Friday, but retreated throughout the final session of the week, with all but the NASDAQ ending the day in positive territory.
It was a particularly telling session for equity markets, as fears surrounding three key issues are due to take center stage in the weeks ahead.
One: The budget battle between the Hill and the White House. Congress wants to keep with the status quo, free-spending policies, producing a budget that will automatically include a huge deficit. Meanwhile, President Trump ran on a balanced budget platform and will threaten to veto any budget the doesn’t meet his objectives, which may not exactly be balanced, but at least closer to it. He has also expressed a willingness to veto any budget that doesn’t include funding for his border wall with Mexico.
Two: The Debt Ceiling debate. This is all about optics. Congress and the president both know they have to pass a debt ceiling increase to keep the US from defaulting on its obligations. There will be much noise and fury, but in the end, the debt ceiling will be raised, again.
Three: FOMC meeting, September 19-20. The Fed will likely not raise the federal funds rate, but, speculation is that they will introduce a timetable for beginning to wind down their massive balance sheet, which could cause economic disruptions of which nobody is sure of the consequences. This could be bigger than what the congress and president do or don’t do.
As the week ended with some volatility, the major indices all finished positive for the week, ending a four week skid for the NASDAQ and a two-week slide on the Dow.
For the Week:
Dow: +139.16 (+0.64%)
NASDAQ: +49.12 (+0.79%)
S&P 500: +17.50 (+0.72%)
NYSE Composite: +112.20 (+0.96%)
At the Close, Friday, August 25, 2017:
Dow Jones Industrial Average
NYSE COMPOSITE (DJ)