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Investing Specialists

Are Investors Getting Ahead of Themselves?

With the impacts of Trump's policies already priced in and current economic data going nowhere fast, the stock market is in no-man's land, writes Morningstar's Bob Johnson.

Markets didn't move much this week as the U.S. Federal Reserve's quarter-point interest rate increase was well anticipated. However, individual Fed governor forecasts seemed to suggest that three rate increases were in store for 2017 instead of the previous expectation of just two. I don't think that should have come as much of a surprise to anyone, but markets seemed to lose some steam after the Fed's announcement on Wednesday.

Markets are currently in no-man's land, largely having priced in possible positive impacts of Trump's potentially stimulative policies, but current economic data is going nowhere fast. A lot of the month-to-month economic data that looked so strong in September and October (which the Fed officially mentioned in its release) suddenly looked just OK in November. Month-to-month retail sales, housing starts, and industrial production, all released this week, faltered some and generally missed expectations. The year-over-year data in these three key reports was less worrisome but certainly didn't indicate a big boom ahead.