The US market started 2019 on a terrible note, with Apple (AAPL) cutting its guidance mainly due to the Chinese market slowdown. Apple’s warning about China pulled the market down yesterday as all major indexes tanked significantly. On January 3, the S&P 500 Index, the NASDAQ Composite Index (QQQ) (VTI), and the Dow Jones Industrial Average fell 2.5%, 3.0%, and 2.8%, respectively.
Apple, Amazon (AMZN), Alphabet (GOOG), General Motors (GM), NVIDIA (NVDA), Facebook (FB), Intel (INTC), and Microsoft (MSFT) fell 10%, 2.5%, 2.8%, 4.1%, 6.0%, 2.9%, 5.5%, and 3.7%, respectively, yesterday. However, the market’s mood seems to have reversed today. Let’s take a look at why.
Feeling the market
President Donald Trump has been quite vocal in criticizing the Federal Reserve, and he directly blamed its chair, Jerome Powell, for threatening “U.S. economic growth” during an interview with the Wall Street Journal recently. Referring to Powell, President Trump said in the interview, “Every time we do something great, he raises the interest rates.” President Trump said that it “almost looks like he’s happy raising interest rates.”
On December 18, before the Fed’s fourth decision to hike rates in 2018, President Trump said in a tweet, “I hope the people over at the Fed will read today’s Wall Street Journal Editorial before they make yet another mistake.” He added, “Feel the market, don’t just go by meaningless numbers. Good luck!” After the Fed’s decision to hike the interest rate in the meeting, which triggered a market sell-off, Trump said, “The only problem our economy has is the Fed. They don’t have a feel for the Market,” on Twitter.
At the American Economic Association’s annual meeting in Atlanta, Powell sounded more dovish than ever. He said, “We will be patient as we watch to see how the economy evolves,” according to CNBC.
While the strong jobs data released earlier today boosted investors’ confidence, Powell’s apparent adoption of the president’s “feel the market” technique could also be driving the market up.