Wednesday, the S&P 500 modestly broke out of its trading range ceiling. Over 75% of the S&P 500 companies recently reporting third quarter earnings have exceeded expectations.
GDP grew 1.9% in the most recent quarter; again, better than expected. Consumers seem to be stepping up their purchasing. The only important lagging category is capital spending; businesses are being very cautious in the face of uncertainty. Hopefully good news will eventually free up some of this spending.
A rising stock market shouldn’t be too hard to expect. The world is awash in liquidity, interest rates are low, where else to go? Responding to the uncertain environment, recently many investors, both individual and institutional, have been sitting on greater than usual amounts of cash. Just a little good news is all it is taking to get some of these investors to step up their purchases. It will not be a straight line, but markets are going higher, stay steady, my friends.
El Solo Toro