The S&P 500 and the Nasdaq edged up to their highest intraday levels ever on Monday after data showed U.S. consumer spending surged in March, but gains in shares remained muted as investors waited for a fresh batch of earnings reports.
Optimism about a U.S.-China trade resolution and dovish Federal Reserve has been powering the benchmark index, which topped its record high of 2,940.91 hit on Sept. 21 for the first time during the session.“It’s really about the administration continuing to hint a trade agreement is near. They’ve consistently told the market they’re going to get there. People don’t want to miss out on the expected rally from that news.
“When you get the solid GDP number and the economy continues to expand the way it is right now, then it might just bring the Fed back in the play. However, the muted inflation numbers might be enough to keep the Fed on the sidelines.““It’s a positive sign. It’s being driven by the fact that overall earnings have come in somewhat better than most had expected. There was a lot of fear coming into earnings season.
“You couple that with the continued expectation that the Fed will stay very dovish, the trade deals that are going to materialize between the U.S. and China and some global data pointing out that, yes, the world’s economies are slowing down, but not as badly as some feared – that’s what’s driving the market at this point. Unless there’s a reversal of those conditions, there’s reason for continued optimism.
“The goldilocks economy is exactly where you are right now. That seems sustainable to me. Overall I think you keep going here,” said Saluzzi citing good earnings, an accommodative Fed and good economic data. “The next catalyst will be the China deal.”“We went down too far in December. The sell-off was based on nothing but fear,” he said. “I’m always looking for fundamentals to support the rally and you still have them.