Market volatility settled and stocks swiftly switched back to gains for the year despite a stronger Consumer Price Index report on Wednesday. The consensus view seems to be that algorithmic trading drove the vast majority of volatility in the prior week and while rising rates could be a real headwind for stocks, most of the large swings were not based on market fundamentals. The market dipped slightly at the end of the week when the Justice Department charged 13 Russian individuals and three companies of conspiring to interfere with the 2016 Presidential election. Sadly, tragedy struck a Florida high school as a nineteen year old gunman killed a coach, athletic director and fifteen young students.
U.S. large cap stocks ended the week up 4.4% in the strongest week since 2013 and the Dow Jones Industrial Average bounced back above 25,000. Emerging market stocks continued to dominate on U.S. dollar weakness and global strength. The 10-Year Treasury broke above 2.9% this week and settled back to 2.87% as the market digested the competing forces of continued signs that the Fed will keep raising rates and the attractiveness of these higher levels. Fixed income returns and publicly traded real estate remain bogged down by the higher rates and commodities moved higher with rising energy and gold prices.