(NEW YORK) — One of the scariest months of the year has gotten off a great start for investors.
The major averages closed higher for the second straight week. For the Dow Jones Industrial Average, this was its best five days since January. The Dow ended the day up 75-points to close the week at 15,376.06. For the month, industrials are up close to 4 percent. The tech-heavy Nasdaq Composite is also up nearly 4 percent and the S&P 500, a broader measure of the markets, has jumped close to 3.5 percent.
What’s behind this rally? David Lutz of Stifel, Nicolaus gives a lot of credit to the tamping down of rhetoric from Syria saying, “there’s a big relief that we are not rushing into something that could spark a broader conflict.” Lutz points out that this walking back from military strikes has caused oil and gas prices to fall from their peaks and has helped certain sectors like housing post solid gains this week.
The big question now for investors is what happens next week when the Federal Reserve has its policy meeting. Will the board members announce that the Fed is going to starting pulling back on its $85 billion a month bond buying program meant to stimulate the economy? If they do, what impact will this have on the markets and the economy? If they don’t, will investors cheer or will it ratchet up the fear that the Fed doesn’t think this economy is strong enough to stand on its own two feet?
Lutz says Washington is about to be front and center for investors.
“We need to get through the decision on the new Fed Chairman and the debt fight,” he says. Lutz believes if either is delayed by partisan bickering the market will not react well.
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