As Equity Prices Rise, Downside Risks Mount
U.S. equities advanced yet again last week with the S&P 500 Index climbing 0.7%. Economic data continued to come in better than expected. Consumer confidence reached its highest level since 2001 last month while the ISM non-manufacturing index, which measures business activity and employment trends, showed its strongest reading since late 2015.
We Are Growing Less Positive (But Not Negative) Toward Equities
Equity markets have increased since the U.S. elections for two principal reasons: optimism over a pro-growth legislative agenda from Donald Trump and improving U.S. and global economic and earnings growth.
The Equity Rally Should Persist, but Expect Bumps
As has been the case for the past couple of months, investors continued to be highly attuned to the political backdrop last week. Early in the week, concerns over the president’s immigration and trade policies cased unease, but sentiment improved on Thursday after Donald Trump signaled a near-term announcement on tax reform.
The Post-Election Rally May Be Losing Steam
U.S. equities finished mostly lower last week, with the S&P 500 Index down 0.9%. Rising interest rates and the climbing U.S. dollar weighed on sentiment, and investors started turning from broad hopes of fiscal stimulus and tax reform to wondering about specifics.
Investors Await Election and Fed Rate Outcomes
U.S. equities moved slightly higher last week, with the S&P 500 Index climbing 0.4%.1 Corporate earnings results were solid, while data showed economic stabilization in China. Investors also reacted positively to high-profile mergerand-acquisition news.
What Factors Will Drive Equities from Here?
During the height of the financial crisis, the Federal Reserve and other central banks stepped in to stave off complete global financial catastrophe. In the ensuing recovery, monetary policy has remained extremely accommodative and been largely responsible for an equity bull market that is nearly eight years old.