Equity Markets Continue Positive Trend, S&P 500 Marks Ninth Consecutive Positive Day

Equity Markets Continue Positive Trend, S&P 500 Marks Ninth Consecutive Positive Day

Equity markets continue positive trend, as the S&P 500 marks its ninth positive day in a row. Global equities (represented by the MSCI All Country World Index) finished up 3.01% while domestic stocks (represented by the S&P 500 Index) were positive 2.94%. The positive momentum we are seeing in the market can be attributed to the recent release of solid earnings reports and better-than-expected employment numbers.

Earnings Growth Rate

The recent release of earnings reports has led analysts to upgrade their projected earnings growth rate for the first quarter. Two weeks prior, analysts had projected that S&P 500 companies would grow their earnings by 7%. However given the most recent batch of earnings to come out, they have revised their Q1 projections for companies to grow their earnings at 12.8%

U.S. GDP

U.S. GDP contracted at a 0.3% annual rate in the first quarter. This is the first negative reading since the first quarter of 2022. The contraction was due to a surge of imported goods as U.S. businesses have been stockpiling inventory ahead of the higher tariffs. As seen in the graph below net exports came in at -4.8%.

Looking Ahead

The Fed meets this week for a two-day meeting that ends on Wednesday.  It is expected that the Fed will keep interest rates unchanged at this time. One thing to note is the interest rate futures market is still implying most investors are still expecting to see three-quarter point rate cuts by year-end.

As Always

I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.