The S&P 500 closed above the 2,500 mark for the first time on Friday. The markets ended a strong week of gains driven by continued favorable conditions for economic growth and the prospects for potentially bipartisan action coming out of Washington.
The Federal Reserve's (Fed) two day Federal Open Market Committee meeting that concludes on Wednesday will be the big news of the week. I expect the Fed will keep interest rates unchanged but will begin the long and slow process of reducing its balance sheet. I will be looking for some additional information from the Fed on expectations for future inflation and clues about a December rate increase.
In this environment, I expect stocks to continue to inch higher and the yield curve to steepen modestly.
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