The record-busting run in the U.S. stock market has continued, as the major stock indexes set new all-time highs in the past week. The S&P 500 just notched six straight weeks of gains, something it hadn't done in more than two years.
The market's latest rally has been fueled by renewed hope that both the U.S. and China sides will strike some sort of trade agreement soon. A deal between the two nations is close, according to White House economic advisor Larry Kudlow, though multiple reports earlier in the week suggested both sides were at loggerheads over the terms of a phase one trade agreement.
Traders don't yet appear to be rattled by anything that's come out of the impeachment hearings that began Wednesday, and there were no major surprises in the latest economic reports. Inflation ticked up slightly, as seen for both producer and consumer prices, while the retail sales report showed spending rebounded in October but consumers cut back on buying big-ticket items.
In testimony before Congress, Federal Reserve Chair Jerome Powell said interest rates are unlikely to change as long as economic growth continues. This week, traders will get more insight about what central bankers are thinking when the minutes from the last meeting are released. In addition, a slew of reports on the housing industry will be released that will show if activity has picked up.
Here's what to watch — and how the news could affect your bottom line.
What's happening: Several closely tracked reports on the housing industry for the month of October are scheduled for release. On Tuesday, expect a report on the number of housing starts (the construction of new homes), followed on Thursday by the number of existing homes sold.
Economists currently project both measures increased.
Why it matters: The housing industry has seen sluggish growth this year, even as the Federal Reserve has cut interest rates in an effort to make it more attractive to borrow money. So far this year, monthly sales of existing homes are averaging the lowest amount since 2015. And more Americans say now is a bad time to buy a home: They mostly blame high prices.
What it means for you: Wall Street monitors the real estate market so closely because the housing industry generally makes up to 18% of gross domestic product (GDP), according to the National Association of Home Builders. The housing market is perhaps one of the best gauges of confidence, because consumers need to feel optimistic about their financial situations to justify such a big expense.
If you haven't already, it's a good time to refinance your mortgage — and applications just jumped to the highest level in more than a month. Many homeowners are taking advantage of still-low rates that are turning higher again.
What's happening: In two days of testimony, Fed Chair Powell assured Congress that he doesn't see see signs of bubbles in the U.S. economy and that interest rates are unlikely to change so long as growth continues.
The minutes from the most recent Federal Reserve meeting, held in late October, are scheduled for release on Wednesday. Policymakers cut interest rates for the third time since the Great Recession at that meeting, though they signaled they'd pause on further cuts. Traders will scour the meeting minutes for more context about that decision and what's ahead.
Why it matters: Traders don't see a greater than 20% chance of another such cut until at least March 2020, and Powell's testimony all but ensures that. Still, there has been dissension among central bankers at recent meetings, and traders will want to understand the logic behind the latest rate cut.
What it means for you: The Fed has lowered interest rates in an effort to stimulate growth by making it cheaper for consumers and businesses to borrow money. That's made it cheaper to take out a mortgage, which could save borrowers thousands of dollars, but also means you earn less on your savings account.
With less than seven weeks of trading left in the year, the U.S. stock market is poised to end one of its best decades ever with a bang. The Dow Jones Industrial Average is up 20% this year. A $500 investment in the Dow 10 years ago would be worth more than $1,700 today.
That said, experts do anticipate some bumpiness in the weeks ahead as traders sort out whether some sort of U.S.-China trade deal will come to fruition. And the 2020 election, which is less than a year away, could also cause some uncertainty. Though the economy is strong, two-thirds of Americans fear a recession could come in the next year, according to the latest CNBC Invest in You survey. If you're concerned, you can take steps to protect yourself now.
Any turbulence in the market can be a good opportunity for long-term investors to buy stocks at lower prices. And no matter what happens in any given week, it's important to keep perspective and remain consistent with your investment strategy.
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