At the end of a week of records that puzzles many observers, Wall Street will set his compass on the many corporate quarterly results after the first salvo reassuring, but hardly representative.
During the past five sessions, the Dow Jones Industrial Average took 2.04% to 18516.55 points a level not seen, and the Nasdaq, dominated by technology, 1.47% to 5029.59 points. The expanded index S & amp; P 500 gained 1.49% to 2161.74 point
“The main news of the week, the Dow as the S & amp;. P 500 rose to unprecedented levels, “summed Hugh Johnson, Hugh Johnson Advisors. “Overall, investors are happy … But the majority feared that one is gone too high and too fast!”
Like the Dow, the S & amp; P 500, often considered most representative by investors, beat closing records for several consecutive sessions to peak at 5034.06 point Thursday night before a small decline on Friday.
“All of a sudden in the mind investors, as we reached record is the time to buy … it’s typical, “quipped Gregori Volokhine of Meeschaert Financial Services. “It was a week under the sign of the fear of missing the rise, which causes people to invest.”
In fact, analysts questioned what in the state of the US economy, also justified a thriving stock market, although investors were informed in weekend encouraging figures about the industry and the consumer.
“one of the reasons is the arrival of international liquidity, as prospects darken in other parts of the world, “said Mr. Johnson, citing gloomy forecasts in Europe.
He saw an explanation to the good performance joint of Wall Street and the US bond market, while the latter, considered a safe haven, tends to stay back when investors are optimistic on the stock market
“If one asks. + what is the safest place to equities and investment + … This is the US market, “said Mr Johnson
-. IBM and GM –
this default attraction causes even more questions that manifests when investors digest the first results of US companies for the second quarter and they are proving, once again, both in the gloomy absolute, but better than very low expectations.
Alcoa metal giant has been hailed stock market despite a drop in profits, while several big banks, like JPMorgan and Citi reported profits down without panic on Wall Street.
“once again, the fundamental is not director of the market”, said Mr. Volokhine. “For Citi, for example, profits are 17% lower than last year …”
Anyway, the results of the financial sector remain subject to the rate of particular reality very low interest, which limit its margins, and investors expect above figures next week to get a more accurate picture of business performance.
more than a burst of indicators on US real estate or a Thursday meeting of the European Central Bank (ECB), in a context where international is secondary to Wall Street, it is results like IBM and Microsoft iT groups (Monday and Tuesday), the automaker General Motors (Thursday) and industrial conglomerate General Electric (Friday) which will set the tone for next week.
“This is where the hard work begins!”, said Art Hogan , Wunderlich Securities. “After several quarters of falling profits, we will see if there is a turning point.”
Still, economists predict another quarter of declining profits, on average 5.6% for the S & amp; P 500 according to data compiled by Factset, which would make it more expensive investments on Wall Street and therefore less and less justifiable rising indexes
“the dollar has stabilized, as prices. oil, and the statistics have improved in the second quarter, “yet assured Mr. Hogan. “This will ultimately boost profits and provide a key driver to stock market that anyway want to go higher.”
JDY / jld / csg
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