Investors still bullish on US stocks and economy

Why are the markets moving higher? Companies are churning out profit, and the economy is healthy.Tariffs, infl...

Posted: Jun 4, 2018 4:42 PM
Updated: Jun 4, 2018 4:42 PM

Why are the markets moving higher? Companies are churning out profit, and the economy is healthy.

Tariffs, inflation, higher rates, and just about anything else that could spook the markets have taken a back seat. Investors care more about the fundamentals than they do the noise coming out of Washington.

Stocks were up again Monday. The Dow rose nearly 200 points, pushing it back into positive territory for the year.

The Nasdaq, the market exchange that's home to Apple, Amazon, Microsoft and many other American tech giants, is now up nearly 10% in 2018.

Friday's jobs report provided a Goldilocksian just-right scenario for bulls. Hiring and pay are going up, but wages aren't rising so dramatically to spark fears of rampant inflation and aggressive rate hikes from the Federal Reserve.

"Investors are looking at the broader data from the US and saying, 'We're still doing okay,' -- especially compared to the rest of the world," said Paul Nolte, portfolio manager with Kingsview Asset Management.

"The market isn't concerned with politics in the long-term. It's focusing more on earnings and the economy," he added.

And the numbers continue to paint a fairly pretty picture. According to estimates compiled by FactSet, analysts are predicting earnings growth of 18.9% in the second quarter and a continuation of double-digit growth for the rest of the year.

So even if the increase of 24.6% from the first quarter winds up a "high water mark" for earnings, as Caterpillar management warned it might in April, investors seem to realize that a nearly 20% increase in profits for the second quarter isn't too shabby.

Related: Consumers are spending a lot more but saving a lot less

Companies are also showing optimism about the future by using more of their cash and stock to scoop up other companies. Merger mania is alive and well, with more than $2 trillion in deals announced already.

Microsoft's $7.5 billion purchase of the red hot startup GitHub, a coding company that's beloved by many leading software developers, is the latest example of how big companies are looking to grow their profits even further through acquisitions.

The jobs report showed that economic growth remains healthy in the United States. The Atlanta Fed's latest forecast now calls for 4.8% growth in gross domestic product -- the broadest measure of the economy -- in the second quarter.

That may seem like a stretch, but the New York Fed's less bullish forecast of 3.3% is still extremely strong too.

Vincent Catalano, global investment strategist with Blue Marble Research, said that investors -- particularly the managers of giant mutual funds and hedge funds -- need more tangible reasons to sell stocks. And they just aren't there right now.

Related: Here's the latest on the possibility of a global trade war

At worst, Catalano thinks stocks may remain stuck in a narrow range for the next few months because of all the "howevers" and "yeah, but" excuses investors may find to keep them from getting more bullish. But that's not the same thing as doom and gloom.

As for that ongoing trade saga? Nolte thinks investors are growing immune to all the flip-flopping from the Trump administration. They seem to be betting that nothing can be taken at face value. It's all part of an ongoing public negotiation.

"The markets are learning that the tactic that's being used by the Trump administration is go for everything and then dial the expectations back. Whatever was said today or last week is likely to change in the coming weeks," Nolte said.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 319115

Reported Deaths: 7353
CountyCasesDeaths
DeSoto22246264
Hinds20612421
Harrison18342316
Rankin13855282
Jackson13666248
Madison10213224
Lee10050176
Jones8452167
Forrest7810153
Lauderdale7253242
Lowndes6488149
Lamar632288
Lafayette6295120
Washington5412136
Bolivar4833133
Panola4659110
Oktibbeha465898
Pearl River4591146
Marshall4571105
Warren4436121
Pontotoc424573
Union415576
Monroe4154135
Neshoba4059179
Lincoln4007111
Hancock385187
Leflore3514125
Tate342386
Sunflower339391
Pike3366110
Alcorn323272
Scott319274
Yazoo313971
Adams304785
Itawamba304777
Copiah299666
Coahoma298283
Simpson297889
Tippah291168
Prentiss283361
Leake271674
Marion271280
Covington266683
Wayne264442
Grenada264087
George251851
Newton248563
Tishomingo230867
Winston229881
Jasper222048
Attala214973
Chickasaw210459
Holmes190374
Clay187454
Stone187233
Tallahatchie179941
Clarke178980
Calhoun173732
Yalobusha167740
Smith164034
Walthall135147
Greene131633
Lawrence131024
Montgomery128643
Noxubee127934
Perry126638
Amite125942
Carroll122330
Webster115032
Tunica107927
Jefferson Davis107633
Claiborne102930
Benton102225
Humphreys97533
Kemper96628
Franklin84923
Quitman81816
Choctaw79018
Wilkinson69332
Jefferson66228
Sharkey50817
Issaquena1696
Unassigned00

Alabama Coronavirus Cases

Cases: 547323

Reported Deaths: 11266
CountyCasesDeaths
Jefferson808021563
Mobile41925826
Madison35600522
Tuscaloosa26136458
Shelby25554254
Montgomery25067610
Baldwin21774313
Lee16234175
Calhoun14692325
Morgan14614285
Etowah14132361
Marshall12443230
Houston10748287
Elmore10295212
Limestone10180157
St. Clair10146250
Cullman9921200
Lauderdale9582248
DeKalb8955189
Talladega8441184
Walker7318279
Autauga7215113
Blount6925139
Jackson6900113
Colbert6394139
Coffee5616126
Dale4928114
Russell454441
Chilton4461116
Franklin430683
Covington4263122
Tallapoosa4117154
Escambia400280
Chambers3715123
Dallas3604156
Clarke352861
Marion3231106
Pike313978
Lawrence3121100
Winston283372
Bibb267364
Geneva256981
Marengo250565
Pickens236562
Barbour234559
Hale226578
Butler223371
Fayette217162
Henry193843
Cherokee187245
Randolph186844
Monroe179141
Washington170339
Macon163051
Clay159559
Crenshaw155057
Cleburne152543
Lamar145837
Lowndes141953
Wilcox127030
Bullock124242
Conecuh112930
Coosa111129
Perry108726
Sumter105732
Greene93434
Choctaw61725
Out of AL00
Unassigned00
Tupelo
Clear
78° wxIcon
Hi: 93° Lo: 73°
Feels Like: 81°
Columbus
Partly Cloudy
78° wxIcon
Hi: 93° Lo: 70°
Feels Like: 81°
Oxford
Clear
73° wxIcon
Hi: 92° Lo: 70°
Feels Like: 73°
Starkville
Partly Cloudy
75° wxIcon
Hi: 91° Lo: 68°
Feels Like: 75°
High pressure moves into our area and will continue to dominate our weather forecast for the next several days. This will mean drier weather in store for our area for several days. However, by this weekend, things could change as a tropical system threatens our area.
WTVA Radar
WTVA Temperatures
WTVA Severe Weather