by Charley Blaine
The US stock market has just completed a strong start to the year, experiencing the best quarterly results since the 2008-2009 financial crisis. On the surface, the figures suggest that the next move of the market will be a serious attack at the highest times ever reached at the end of last summer and early fall. And indeed, on the second day of Q2 trading, the reference index closed at the highest level since October, reinforcing this view.
However, this demonstration is not a continuation. On the contrary, it was a rebound from a nasty backlog in the fourth quarter and stocks are basically back to where they were in September. Moreover, there are many questions that could weigh on the market.
The first quarter rally saw the jump 13.07%, with the increase of 11.15% and the increase of 16.5%. The jump with 16.6%.
While the popular mega-caps posted strong gains, growth with Apple (NASDAQ 🙂 increased by 20.4%, Facebook (NASDAQ 🙂 by 27.1% and Netflix (NASDAQ 🙂 by 33% – smaller shares also enjoyed the fun.
The biggest winner of the S&P 500 was Coty (NYSE :), an increase of 77%, followed by Chipotle Mexican Grill (NYSE :), an increase of more than 67% and Xerox (NYSE :), an increase of almost 63%.
On the Dow, Cisco Systems (NASDAQ :), a 24.6% increase, was the leader, followed by IBM (NYSE :), a 24.1% increase, and United Technologies (NYSE :), a increase of 21.1%. Boeing (NYSE 🙂 ended 18.3% for the quarter, despite the March dive, which saw its shares fall 13.3% after the second crash of the company's 737 MAX 8 jetliner.
The NASDAQ 100 Index was led by LatAm-based online retailer MercadoLibre (NASDAQ :), an increase of 73.4%, Ctrip.Com International (NASDAQ :), the Chinese-based travel company, an increase of 61.5 % and chip maker Xilinx (NASDAQ:), an increase of 48.9%.
One of the worst quarterly performers on the index: Tesla (NASDAQ :), a decrease of 15.91%, from concerns that the sale of vehicles by the electric car manufacturer is being squeezed when tax credits expire. Kraft Heinz (NASDAQ :), however, had the weakest score, but fell by 24.9% after disappointment.
In the area of ​​bragging rights for which the company is now the most appreciated, Apple and Microsoft (NASDAQ :), an increase of 16%, ended the quarter fairly close in terms of market capitalization at $ 895.7 billion and $ respectively 904.9 billion. Amazon.com (NASDAQ 🙂 stood at $ 874.7 billion.
The ongoing rally of yesterday strongly indicates that the highest times of last year will probably be surpassed in the not too distant future.
The Dow is now 2.5% below its peak of 26,951.81. The S&P 500 is 2.5% below its 2,940.91 height. The NASDAQ Composite is 3.7% below its 8,133.30 peak, while the NASDAQ 100 is less than 3% of its 7,700.56 peak.
There is a good reason for bullishness in the short term.
Interest rates are low, which can help with home sales and related purchases, as well as with car sales. of the Institute for Supply Management on Monday signaled continued economic growth, boosting expectations for a strong coming Friday. And from China was better than expected.
There is also optimism that the stock market introduction market can heat the rally and add fuel. Still, that could be tempered by Lyft (NASDAQ :), who was released on Thursday at $ 72 and traded as high as $ 88 before returning. The shares of the company with trip investments fell nearly 12% yesterday, after losing 11% on Monday on the second trading day of the shares. Lyft has burned money because it seems to build up sales and market position. Rival Uber, which is expected to appear shortly, is losing even more money and investors have to decide whether both are worth the risk.
The sharp rise to new highs will also cause headwinds to test the market. These include:
How fast the market moves past last summer's highlights Technical traders look at the momentum through a variety of tools, including relative strength indexes that can trigger automatic sales. You saw this at work at the end of March when the RSI & # 39; s of the S & P 500 and NASDAQ both reached the top of 70, a signal that prices are getting too high. Stocks were withdrawn a day later.
Can the United States and China successfully negotiate a trade agreement that offers more than words on paper? A real deal would be very optimistic.
Rising oil prices. is still a third this year and Saudi Arabia is pushing for global oil prices of more than $ 70, preferably more than $ 80. Petrol prices in the US retail trade are rising by nearly 20% this year, according to AAA, after falling 9% a year ago.
Economies in Europe are contracting . The inability of the United Kingdom to come up with a workable plan to leave the European Union is also a threat.
The potential / probability for a division of American elections in 2020 .
Saber rattles between Venezuela and the United States .
The Federal Reserve. The US Central Bank has said it will slowly raise interest rates, making President Donald Trump happy. Larry Kudlow, the president's economic adviser, believes the Fed should lower interest rates. And his friend Stephen Moore, who thinks the rates are too high, could soon become a Fed governor. Cutting speeds that are too high run the risk of increasing inflationary pressure. If the economy is stronger than people think, the global bond market will ensure that no one can keep interest rates low.
