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Financial Articles from Hefren-Tillotson

This Chart Shows Stocks Have Entered New Territory

March 29, 2017

As winter gives way to spring in Western Pennsylvania, so too have financial markets entered a new season.

After dominating the finance landscape for nearly a decade, the Federal Reserve is no longer the predominant force influencing markets.

In the years following the 2008 recession, the Feds efforts to inject money into the economy greatly influenced stock market performance. Indeed, stocks followed the Fed in near lockstep (chart). Anemic economic growth in the U.S. and troubles overseas made the Fed the best thing going for stocks. Readers will recall the preoccupation in financial media during this time with forecasting the Feds course of action.

Yet when the Fed raised rates this month to 1.0%, the reaction by investors and the media was subdued. That’s because there are new forces driving the markets, including improved economic growth overseas and talk of tax cuts and stimulus in the U.S. Stocks have uncoupled from the Fed (chart) — an encouraging development that signals the U.S. economy is now able to stand on its own without constant support from the central bank.


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