Well, then. The stock market has certainly turned itself around in a hurry.
A few weeks ago, the S&P 500 was inches away from entering bear market territory. But the Dow has rallied 2,000 since Christmas, and all is well on Wall Street again.
For now, at least.
“Investors hate ambiguity, and we got a triple dose of ambiguity between Brexit, the Fed and trade,” said Mark Howard, senior multi-asset specialist at BNP Paribas on CNN Business’ “Markets Now” live show on Wednesday.“We’ve seen some of that dissipate, and when people jump in the pool, it persuades others to jump in.”
Howard told CNN Business editor-at-large Richard Quest that a few positive factors have improved market sentiment this year.
Federal Reserve Chairman Jerome Powell successfully calmed the market last week when he said the Fed could change its hawkish monetary policy if the economy takes a turn for the worse. The Trump administration’s trade talks with China have eased fears of a trade war escalation. And though Brexit remains a giant question mark, investors have considered that by now when valuing stocks.
Investors aren’t out of the woods yet, though. The global economy is slowing down, and China’s jittery consumers aren’t buying as many Amerian products. Apple and FedEx both recently warned that their sales and profits would be lower than forecast because of China’s lagging economy.
Corporate earnings across the board are expected to be weaker this year than they were last year. But that’s not going to shock investors anymore, Howard noted.
“Earnings will be lower, but we think a lot of that is priced in,” he said. “It’s not going to be a surprise when Apple (AAPL) and FedEx (FDX) say the international market has slowed this quarter … unlike US equities before the fourth quarter, when valuations were very high.”
Howard believes the current market rally has enough momentum to last through February. In March, however, when the Fed may begin to raise rates again, the market could enter another volatile period.
Until then, US stocks remain a good bet.
“I think the economic numbers in America are so strong, we’re the best house in the worst neighborhood,” said Alan Valdes, senior partner at Silverbear Capital, on “Markets Now.”
Next week, Mohamed El-Erian, chief economic adviser at Allianz, will join CNN Business for “Markets Now.”
The show streams live from the New York Stock Exchange every Wednesday at 12:45 p.m. ET. Hosted by CNN’s business correspondents, the 15-minute program features incisive commentary from experts.
You can watch “Markets Now” at CNN.com/MarketsNow from your desk, phone or tablet. If you can’t catch the show live, check out highlights online and through the Markets Now newsletter, delivered to your inbox every afternoon.
