As first quarter reporting season draws to another constructive close, investors’ attention was ripped away from the earnings scorecard and refocused almost exclusively on trade.
A Curve Ball in May
Rattle and Hum
Headlines screaming, “fire and fury,” and “ballistic rockets are on constant standby,” could have surely warranted a multi-percentage sell-off. Fortunately, the market’s reaction was somewhat muted, falling just over 1 percent for the week. Historically, North Korean headlines have had minimal impact on the stock market. In 2006, when they detonated their first nuclear device, U.S. stocks were actually up.
Politics and the Markets
Political risk has always been frustrating for investors. We like the rules of the game to be known and the playing field level. Any kind of uncertainty leads to volatility in markets. While many believed that the Republican sweep would deliver pro-growth initiatives, Trump’s troubles have led to concerns regarding those outcomes.
Winds of Change
What has become known as the Trump Trade has delivered strong equity returns since election day last fall, with the benchmark S&P 500 rising by 6.5 percent over this period. More remarkable is the fact that the blue chip index hasn’t experienced a 1 percent or greater loss since October 11, 2016.
An Early Christmas
In a relatively quiet week on the company news front, investors welcomed a series of new highs on the S&P 500 that have pushed the benchmark index to price gains now exceeding 10 percent on the year.