More record highs this week for the S&P 500 as market participants grow more comfortable with the idea that the economy is continuing to recover. While it’s never perfect, it seems we’re going to be ok, and the market is getting on with it. Earnings season has gotten off to a great start, which has helped to bolster stock prices upward. According to Bloomberg, some 81% of S&P 500 companies have reported better-than expected results so far. Additionally, mid-cap stocks are attempting to break out to the upside after trading in a sideways range for the past ~6 months. This is a good sign that participation is widespread and not isolated to just the largest companies that led during much of the recent move higher. The advance/decline line on the S&P 500 just made a new high, confirming the recent new highs are legitimate.
This positive market news coupled with the good enough economy and little less noise from Washington are helping to counter concerns of elevated, (yet steady) inflation and eminent tightening of monetary policy (both of which would slow the economy).
The White House and Congress are exploring options to fund the proposed plan. The alternatives being floated include a 15% tax on all corporate stock buybacks and a billionaires wealth tax on unrealized capital gains, note: these proposals are still being negotiated. House Speaker Pelosi said she expects a deal on the larger reconciliation bill and a debt ceiling provision by the end of this week.
Bottom line is that we have no shortage of news, investors are understandably fatigued and possibly confused, but we’ll get through it. The market is the world’s best leading indicator, and it’s saying very loudly that it thinks in 12 months things will be better than they are now. Hang in there.
Have a nice weekend!
Sincerely: DeHaven, Michael, Janet, Mariah and Tamara.