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Last week, the Federal Reserve (Fed) reduced interest rates by 25 basis points in a much-anticipated move. The coinciding statement from the central bank suggested that the Fed would not be reducing rates further unless economic data warranted it.
In addition to the Fed cut that supported risk markets last week, the October employment report was stronger than expected, with 128,000 new jobs being added versus an expected 85,000. Prior reports were revised higher, a move that continues to demonstrate a strong labor market.
Stocks reached new highs last week driven by monetary stimulus, decent economic activity and optimism on the trade front. These three factors will likely push stocks higher for the remainder of 2019. Headline risk certainly exists in this market, but given valuations, stocks look well positioned to post strong fourth quarter returns.
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