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.

Minnesota Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 21315

Reported Deaths: 890
CountyConfirmedDeaths
Hennepin7168539
Ramsey243797
Stearns195012
Nobles14692
Anoka121056
Dakota110235
Olmsted56210
Washington52729
Kandiyohi4681
Rice3862
Clay37324
Scott3582
Wright2531
Sherburne2142
Todd2040
Mower1891
Carver1742
Benton1672
Steele1410
Martin1255
Blue Earth1151
St. Louis11113
Freeborn930
Pine850
Winona7815
Carlton730
Nicollet695
Cottonwood640
Otter Tail600
Polk592
Watonwan560
Crow Wing561
Goodhue552
Itasca537
Chisago481
Dodge440
Chippewa420
Meeker420
Le Sueur411
Jackson390
Morrison380
Becker370
Murray350
Lyon340
Douglas290
Isanti280
McLeod270
Waseca250
Unassigned229
Rock210
Mille Lacs171
Fillmore171
Swift160
Wabasha160
Brown122
Beltrami120
Faribault120
Sibley120
Wilkin113
Cass112
Kanabec111
Norman110
Pipestone100
Marshall90
Pennington90
Pope80
Aitkin60
Wadena60
Koochiching60
Yellow Medicine60
Renville50
Mahnomen51
Lincoln50
Clearwater30
Big Stone30
Traverse30
Lac qui Parle30
Red Lake30
Redwood30
Grant20
Houston20
Roseau10
Hubbard10
Lake10
Kittson10

Iowa Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 17533

Reported Deaths: 456
CountyConfirmedDeaths
Polk3774108
Woodbury262424
Black Hawk168239
Linn93575
Marshall87011
Dallas85714
Johnson6027
Muscatine54539
Wapello5144
Crawford4862
Tama39423
Scott3379
Louisa3347
Dubuque32316
Jasper25616
Buena Vista2430
Pottawattamie2126
Sioux2070
Washington1808
Wright1220
Allamakee1184
Plymouth1160
Warren1110
Story951
Poweshiek888
Mahaska856
Bremer676
Henry611
Clinton601
Des Moines551
Boone550
Cedar461
Guthrie433
Taylor390
Benton371
Jones360
Clarke350
Iowa330
Monroe334
Osceola320
Buchanan320
Shelby310
Clayton303
Marion290
Webster271
Hamilton260
Fayette260
Monona240
Madison241
Winneshiek230
Lee220
Cerro Gordo221
Davis200
Grundy190
Lyon190
Harrison190
Jefferson180
Floyd181
Mills160
Cherokee160
Butler150
Delaware150
Keokuk140
Greene130
Sac130
Hardin130
Humboldt130
Ida130
Howard120
Jackson120
Appanoose123
Hancock120
Audubon111
Cass110
Van Buren100
Clay100
Page100
Winnebago100
Carroll90
Dickinson90
Franklin80
Adair80
Chickasaw80
Emmet70
Union70
Kossuth70
Unassigned60
Lucas60
Montgomery60
Adams50
Ringgold40
Fremont40
Mitchell40
Pocahontas40
Palo Alto30
Worth30
Calhoun20
Wayne10
Decatur00
Rochester
Broken Clouds
63° wxIcon
Hi: 78° Lo: 62°
Feels Like: 63°
Mason City
Few Clouds
65° wxIcon
Hi: 78° Lo: 64°
Feels Like: 65°
Albert Lea
Scattered Clouds
64° wxIcon
Hi: 75° Lo: 65°
Feels Like: 64°
Austin
Clear
66° wxIcon
Hi: 79° Lo: 67°
Feels Like: 66°
Charles City
Broken Clouds
66° wxIcon
Hi: 79° Lo: 65°
Feels Like: 66°
Storms a brewin'
KIMT Radar
KIMT Eye in the sky

Latest Video

Image

Weather 5/25

Image

Honoring Veterans During a Pandemic

Image

Loud Mouth Brass Band spreads cheer to residents in Slattery Park

Image

Finding the silver lining during the pandemic

Image

Will Memorial Day cause a coronavirus spike?

Image

Can you catch Covid-19 from mosquitos?

Image

125 Live Restaurant partnership

Image

Taps in City Park

Image

100 Most traveled days in MN have begun

Image

Parade in the park

Community Events