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News

The Market Wrap for November 3: Jerome Powell to Chair the Fed

Asif Imtiaz Nov 03, 2017


Investors took a breather on Monday after news broke that the upcoming tax legislation may phase in the proposed tax cuts over the next five years instead of doing so immediately. Meanwhile, record-high consumer confidence, catered by a healthy labor market, minimized further downside possibilities.

Consumer spending makes up a large portion of the U.S. GDP and it reached an eight-year high in September, which prompted the Fed to comment that the economy is growing moderately and however concerning the low inflation situation is, it would likely reach the targeted 2% level in the medium term.

Although the Dow started the week on a negative note on Monday, the market soon resumed an uptrend after learning Jerome Powell will become the next chair of the Federal Reserve. The new Fed chair has considerable market regulatory experience and is likely to bring a refreshing, business-friendly outlook that will be beneficial to the equities market.

To conclude, while Wall Street expects the new Fed chair to be more hawkish, he is expected to continue pursuing some of Janet Yellen’s policies, and a gradual policy shift toward deregulation should bring more stability to the economy as opposed to drastic measures – so expect more upside to the stock market with this new Fed chair.

Be sure to check out our previous week’s edition here, in which the housing market bounced back as home sales increased.

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