Well, it only took 10 months, but the White House and the Democrats finally reached an agreement—a three month extension on the debt ceiling along with a Hurricane Harvey relief package. It’s just in time for a possible Hurricane Irma relief package, as this “monster hurricane” with sustained winds of 180 mph takes aim on South Florida, with Miami in its crosshairs.
The debt ceiling agreement, which runs out December 15 (does anyone really think we will have a Christmas government shut down?), has given traders hope that this polarized government will be able to work together on infrastructure spending and tax cuts. But don’t bet on that!
The Dow (^DJI, DIA) did rise slightly yesterday to close up 54.33 at 21,807.64. The S&P 500 (^GSPC, SPY) climbed 0.31% to finish the day at 2,465.54, and the Nasdaq (^IXIC, QQQ) rose 0.28% to settle at 6,393.31. It was a welcome turn of events after Tuesday’s 200 point drop—the biggest one day drop since August 17. Today, tech (XLK) and health care (XLV) are showing signs of life.
This back-and-forth volatility will probably be with us for the time being. Remember that over the summer, the VIX (^VIX, VXX) fell as low as 8.84 while traders complained the market was too complacent. Now there’s worry of too much volatility, as the VIX climbed above 12 this morning. Traders: They’re never happy!
We get a slew of central bankers speaking this week. This morning, ECB President Mario Draghi left the central bank’s benchmark interest rate unchanged. Many traders felt that after comments he made at the last meeting, that they would start reducing their 2.3 trillion euro Quantitative Easing (QE) program. But no word yet. We also will hear from Cleveland Fed President Loretta Master, New York Fed President William Dudley, and Kansas City Fed president Esther George.
It may be a short week, but stick with us because markets will keep moving!