This week was marked by two big factors. The first continued to be volatility stemming from earnings. In an almost manic fashion, investors have been exaggerating the treatment of stocks reporting their quarterly numbers. On the one hand, firms that are failing to deliver have been punished pretty badly. On the other hand, stocks have been heavily rewarded for producing better-than-expected results. This bifurcation has persisted over the last few weeks, but it really took on a life of its own as the market continued to hit new highs this week.
Also helping propel the market to higher was an old –but much reported on – issue. And we’re talking about the trade skirmish between the U.S. and China. Optimism about a deal reached new highs this week as several reports began circulating that the two nations were finally looking at securing a deal, reducing tariffs and getting back to growing their respective economies. While investors have heard this song before, the news reports this time around seems to be sticking. This helped boost the overall mood of traders and kept stocks surging to new records.
Elsewhere, the first week of the month brought a plethora of economic data. The best part being that several key metrics – from manufacturing, services and unemployment – came in stronger than estimated, providing more fuel on the fire that the U.S. economy is still on strong footing.
Positive data and the great news on the trade front continued to lift the major indices to record highs this week, despite the earnings-induced volatility.
Be sure to check out our previous Wrap here, when Powell provided what the market wanted.
