The final few earnings reports are yet to trickle in, but it’s already
clear that U.S. large-cap stocks had a much better first quarter than
the market had anticipated. Prospects for the Standard & Poor’s in
coming quarters are generally seen as positive, though with a couple of
The Standard & Poor’s 500 index is near a record high and volatility is
close to a quarter-century low. It’s a combination that would seem
optimal for those who enjoy watching their wealth grow but at the same
time value a good night’s sleep. However, some worry about the quiet.
When it comes to U.S. economic expectations, the fixed income market
appears to be both optimistic and pessimistic. Pessimists see several
challenges ahead such as a slowinggrowth trend, a legislative stalemate
in Washington, and ongoing political turmoil in Europe andNorth Korea.
However, optimists believe stronger earnings are an indication of
France’s weekend election provided an immediate boost for European
stocks.However, we think attractive valuations combined with improving
corporate profitability andeconomic conditions provide a longer-lasting
opportunity for investors. Recent economic datasignals a positive trend
in Europe that appears to be strengthening.
Seven weeks ago, U.S. stocks sat at all-time highs which had investors
feeling festive. The spirit has since waned a bit, but it’s unclear if
the party is completely over as the index was only 2% below its March 1
record as of Tuesday.