In a holiday-shortened week, stocks gyrated around the flat line. Weakness in the health care sector as a reaction to increasing political headlines was offset by healthy gains in industrial stocks, driven by solid earnings and better-than-expected manufacturing data from China. With valuations having rebounded back to historical averages, most major U.S. indexes are now trading near all-time highs. We think corporate earnings will likely be the key to driving markets higher for the balance of the year. With about one-third of the companies in the S&P 500 reporting first-quarter results this week, investors will have plenty to digest. Earnings reports can prompt volatility in individual stocks. Owning a sufficient number of stocks in your portfolio can help reduce this volatility.
Near New Highs for the Market -- So What's Changed?
When riding a rollercoaster, you go up, you go down, and you end up back where you started. Over the past seven months, the U.S. stock market has traveled a similar path. The S&P 500 is essentially back to its peak of last September, sitting just slightly more than half a percent from an all-time high. With investors strapped in for the ride, which included a sizable pullback late last year and historically strong gains to start 2019, we'd note five important takeaways for investors:
We think there is still more upward track ahead for this bull market, but investors should expect more twists and turns as we advance. With the U.S. stock market having returned to the same perch it occupied before the late-2018 drama, it's useful to consider what's changed…
Craig Fehr, CFA
Sources: 1. Bloomberg, 2. Bloomberg consensus earnings estimates, 3. Factset, Edward Jones calculations
|Dow Jones Industrial Average||26,560||0.6%||13.9%|
|S&P 500 Index||2,905||-0.1%||15.9%|
|10-yr Treasury Yield||2.56%||-0.01%||-0.12%|
Source: Bloomberg, 04/18/19. *5-day performance ending Thursday. Bonds represented by the iShares Core U.S. Aggregate Bond ETF. Past performance does not guarantee future results.
The Week Ahead
The Weekly Market Update is published every Friday, after U.S. markets close.
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