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This Chart Shows Stocks Have Entered New Territory

As winter gives way to spring in Western Pennsylvania, so too have financial markets entered a new season.

After dominating the finance landscape for nearly a decade, the Federal Reserve is no longer the predominant force influencing markets.

In the years following the 2008 recession, the Feds efforts to inject money into the economy greatly influenced stock market performance. Indeed, stocks followed the Fed in near lockstep (chart). Anemic economic growth in the U.S. and troubles overseas made the Fed the best thing going for stocks. Readers will recall the preoccupation in financial media during this time with forecasting the Feds course of action.

Yet when the Fed raised rates this month to 1.0%, the reaction by investors and the media was subdued. That’s because there are new forces driving the markets, including improved economic growth overseas and talk of tax cuts and stimulus in the U.S. Stocks have uncoupled from the Fed (chart) — an encouraging development that signals the U.S. economy is now able to stand on its own without constant support from the central bank.

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This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.

Investment Advisory Team
Hefren-Tillotson

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