U.S. financial markets continued a post-election constructive trend last week, with all three major stock indices posting strong double-digit positive percentage weekly gains. The S&P 500 Equal Weight Consumer Discretionary index hit an all-time high, which is a very interesting sign of potential optimism from investors. Ross Mayfield, investment strategist at Baird Private Wealth Management, noted this impressive milestone. He thinks it’s evidence that worries about economic problems driven primarily by new tariffs are overstated.
The result, of course, was a dramatic last week for the Dow Jones Industrial Average, which rocketed up over 1.7%. In contrast, the S&P 500 and Nasdaq Composite rose 0.9% and 0.8%, respectively. This trend marks the fourth week of gains for both the S&P 500 and Nasdaq out of the last five weeks, demonstrating resilience in the face of economic uncertainties. Additionally, the big three averages scored their second straight week of gains.
Investors were especially bullish on small-cap stocks, which gained over 3% last week. Analysts attribute this jump to soaring hopes for coming rate cuts from the Federal Reserve. Indeed, this development is just one indicator of strong bullish sentiment among market participants.
As of shortly after 6 p.m. ET, Dow, S&P 500 and Nasdaq 100 futures were little changed. Dow futures at least were able to squeak higher by 0.09%. The market is open and primed for opportunity! More than 92% of S&P 500 companies have weighed in on their earnings for the quarter. Importantly, almost 82% of these firms have beaten Wall Street projections, doing much to raise confidence among investors.
As we explore in this reflection, it can be easy to ignore market realities when it comes to dominating economic narratives. As investors continue to digest earnings reports and anticipate future monetary policy shifts, market dynamics may evolve further in the coming weeks.
“With the market’s message quite upbeat … it raises the question of whether the conventional wisdom about a weakening U.S. consumer and potential stagflation is missing the mark.”
This reflection underscores the potential disconnect between prevailing economic narratives and actual market performance. As investors continue to digest earnings reports and anticipate future monetary policy shifts, market dynamics may evolve further in the coming weeks.