President Trump's executive order banning travel from seven predominantly Muslim countries to the United States for 90 days, in tandem with some disappointing earnings reports, inspired turmoil and uncertainty that helped push U.S. stock markets lower early in the week. The Dow Jones Industrial Average dropped below 20,000.
Mid-week, markets remained sanguine after the Federal Reserve left interest rates unchanged. An economist cited by Barron’s said:
“[The Federal Reserve] left open the door to hike rates further should the trend in inflation accelerate while also maintaining the option to hold rates steady for an extended period. I expect the minutes to be released in a few weeks will show a more wide ranging debate than that indicated by the policy statement, but the clear lack of visibility on key trade, tax, spending, and regulatory initiatives argued for a well-scrubbed statement.”
Late in the week, markets rallied when the Bureau of Labor Statistics delivered a reasonably strong jobs report. The Boston Globe wrote, “…employers added a healthy 227,000 workers to their payrolls in January. But, despite a surge of local minimum-wage increases in states across the country, wage growth was meager.”
Financial shares gained on Friday. The Washington Post reported market optimism returned after The Wall Street Journal published an interview with Gary Cohn, White House Economic Council Director. Cohn indicated President Trump planned to sign executive orders preparing the way to dismantle Dodd-Frank reforms and limit other regulations affecting the financial industry.
The Dow finished the week just above 20,000.
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SOURCES:
http://www.forbes.com/sites/antoinegara/2017/01/30/trump-travel-ban-stirs-u-s-stock-selloff-fitbit-and-tempur-sealy-plunge-on-weak-earnings-guidance/#5456d1d246cd
http://www.barrons.com/articles/dow-holds-on-to-20-000by-the-skin-of-its-teeth-1486188910?mod=BOL_hp_we_columns (or go tohttps://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/02-06-17_Barrons-Dow_Holds_on_to_20000-By_the_Skin_of_Its_Teeth-Footnote_2.pdf)
http://blogs.barrons.com/stockstowatchtoday/2017/02/01/did-i-miss-something-dow-little-changed-as-stocks-ignore-fed-snoozer/?mod=BOL_da_rta
https://www.bostonglobe.com/business/2017/02/03/starts-year-with-job-surge-but-pay-gains-are-weak/FFKfutGVD3eMfDBYGLCPBJ/story.html
https://www.washingtonpost.com/news/morning-mix/wp/2017/02/03/trump-to-order-rollback-friday-of-regulations-aimed-at-finance-industry-top-aide-says/?utm_term=.50ba0a1af37e