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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.

Cases: 441935

Reported Deaths: 5885
CountyCasesDeaths
Hennepin918591461
Ramsey39405729
Dakota32551324
Anoka30638354
Washington19827221
Stearns17686184
St. Louis13453237
Scott1178693
Wright11485101
Olmsted1024870
Sherburne812364
Carver686636
Clay643278
Rice595266
Kandiyohi551069
Blue Earth533833
Crow Wing476573
Otter Tail449860
Chisago446331
Benton414885
Winona383946
Douglas370366
Nobles364646
Mower358026
Goodhue340757
Polk326754
McLeod321644
Morrison308743
Beltrami305746
Lyon298735
Itasca281143
Becker279438
Isanti279440
Carlton276942
Steele26879
Pine263813
Freeborn237219
Todd230029
Nicollet222136
Brown212334
Mille Lacs211645
Le Sueur206515
Cass203823
Meeker197433
Waseca187515
Martin168226
Wabasha16712
Roseau164916
Hubbard146937
Redwood138527
Renville136139
Houston133213
Dodge13134
Chippewa130632
Cottonwood125118
Fillmore12084
Wadena118214
Rock108511
Sibley10757
Aitkin106633
Watonwan10548
Faribault103214
Kanabec96818
Pennington95915
Pipestone92522
Yellow Medicine92514
Murray8585
Jackson84510
Swift82617
Pope7355
Marshall70115
Stevens6968
Clearwater68114
Lac qui Parle65216
Lake62215
Wilkin6179
Koochiching57910
Lincoln4771
Big Stone4513
Unassigned43568
Grant4247
Norman4218
Mahnomen4077
Kittson36619
Red Lake3154
Traverse2433
Lake of the Woods1741
Cook1130

Iowa Coronavirus Cases

Data is updated nightly.

Cases: 300884

Reported Deaths: 4197
CountyCasesDeaths
Polk44949440
Linn17563269
Scott15228161
Black Hawk13552228
Woodbury12896175
Johnson1191749
Dubuque11229148
Pottawattamie8863112
Dallas874169
Story857433
Webster464768
Cerro Gordo458766
Sioux452451
Clinton445461
Warren430637
Marshall424561
Buena Vista389029
Muscatine382275
Des Moines377340
Plymouth347967
Wapello336796
Jasper315955
Lee310828
Marion298852
Jones268949
Henry262130
Carroll252233
Bremer240048
Crawford227622
Boone214116
Washington213531
Benton207543
Mahaska189936
Jackson189631
Tama184757
Dickinson183225
Delaware171136
Kossuth169241
Clay165319
Wright161724
Fayette157022
Buchanan156920
Hamilton156828
Hardin153129
Harrison152961
Winneshiek150819
Clayton149848
Cedar149119
Butler145423
Page143115
Floyd137236
Cherokee137125
Mills135216
Lyon133132
Poweshiek131024
Hancock127924
Allamakee125927
Iowa122122
Calhoun12159
Jefferson118623
Grundy118522
Winnebago117229
Madison11639
Mitchell114634
Louisa113729
Cass111741
Chickasaw110111
Sac110115
Emmet109931
Appanoose108838
Union107922
Humboldt103919
Guthrie102124
Shelby101026
Franklin99818
Unassigned9370
Palo Alto8969
Keokuk84225
Montgomery82722
Howard81119
Monroe79918
Pocahontas77211
Clarke7717
Ida73530
Greene6837
Davis68221
Adair68120
Lucas6458
Osceola6349
Monona62316
Taylor5889
Worth5873
Fremont5005
Van Buren49112
Decatur4744
Ringgold4229
Wayne41321
Audubon4118
Adams2923
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