By Joyce Yu
Led by blue chips such as Boeing, Goldman Sachs and Walmart (WMT), the Dow edged up on Monday, climbing to its ninth record high in a row. The index has gone up 12% in 2017.
But U.S. markets were lower at open this morning. As of 9:45am (ET), the Dow was down by 28.55 points or 0.13% to 22,089.87 points, while NASDAQ and S&P 500 shed 0.29% and 0.17% respectively.
Wall Street has focused more on corporate earnings but less on the political turmoil during Trump’s first 200 days in office.
In a CNN report, JJ Kinahan, chief market strategist with TD Ameritrade , was quoted that “Investors are not worried about risks. The market is ignoring noise.”
Kinahan notes that it’s hard to remember a period where so many people think stocks are due for a big pullback. Sometimes when people all expect the market to zig, it zags instead.
The rally has been fueled by gains in large tech stocks such as Apple, Amazon, Facebook, Microsoft, and Google owner Alphabet and other hot picks like Netflix.
With 84 per cent of the companies in the S&P 500 having reported their earnings for the past quarter, a blended rate of the actual results and analysts’ forecasts indicate that earnings rose 10.1 per cent year-on-year, according to FactSet.
Companies are therefore on track for the second-highest year-over-year growth since the fourth quarter of 2011 and the first time companies in the index have seen two consecutive quarters of double-digit growth since the third and fourth quarters of 2011, the Financial Times reported.
CNN notes in its report that the stock market just doesn’t want to go down. It could be a bad sign for the broader economy if more companies don’t start to participate in the rally. Experts usually prefer when a larger mix of companies are doing well.
“The market is not as healthy as it looks. A rising tide is only lifting the biggest boats,” said David Lafferty, chief market strategist for Natixis Global Asset Management.
What is particularly worrying to Lafferty is that the market may be ignoring the possibility of the Fed raising debt ceiling later this year.
“Why does it seem like no one cares yet? Because the fundamentals are improving,” said Mr Lafferty. “But will that still be the case, say, in the second week of October?”
