“Growth is still improving and liquidity is still abundant,” Andrew Sheets, chief cross-asset strategist at Morgan Stanley, said in a note. “The bull market remains intact, and I struggle to see the type of calamity that defined the summers of 2010, 2011, 2012 and 2015,“But a harder, choppier, more range-bound summer does seem likely.”
If 84% remains the final percentage, it will tie the mark for the highest percentage of S&P 500 companies reporting a positive EPS surprise since FactSet began tracking this metric in 2008.
Yet, even with the robust earnings reports, investors seem a bit gun-shy about jumping into equities and stock ETFs at these lofty levels.
“Despite the strong earnings reports we’ve seen thus far, the market is really taking beats in stride amid already high valuations,” said Chris Larkin, managing director of trading and investing product at E-Trade.
Some of the reticence to purchase stocks could be attributed to data that arrived Monday revealing that new orders for capital goods rebounded less than expected in March. The Commerce Department said orders for non-defense capital goods excluding aircraft gained 0.9% last month, falling short Dow Jones estimates of a 2.2% increase.
Last week, markets were spooked by news reports that President Biden may increase the capital gains tax on wealthy Americans to help fund his proposed plan for the country. The president is expected to detail the $1.8 trillion plan, including spending proposals aimed at worker education and family support, to a joint session of Congress Wednesday evening.
The S&P 500 ended the volatile week down 0.13%, breaking a month-long winning streak. The Dow and the Nasdaq lost 0.5% and 0.3% last week, respectively.
Meanwhile, investors are awaiting further guidance from the Federal Reserve Chairman Jerome Powell, who will host a press conference Wednesday afternoon to discuss the Federal Open Market Committee’s decision.
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