The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Moving along
Relative quiet in the Middle East allowed stocks to trade calmly. Futures overnight were up small, without volatility, and when regular trading commenced, the pattern continued. Macro data shows that the US economy is chugging along nicely, without meaningful negatives due to the Iran conflict. Midday news threw a touch of cold water on the bulls. Headlines suggested that the eventual agreement between the US and Iran would take longer than just a couple weeks. This probably shouldn’t be news to the market, but the published stories affected the tape nonetheless. The yield curve remains a bit of a headwind, steepening some today.
Whether wise or not, markets are trying to get back to business as usual. Earnings season is slowly moving to the front burner and the beats are coming en masse. 24 of the 25 S&P 500 stocks that have already reported, beat the Street. That’s a significant enough difference to get tongues wagging. The performance of the stocks themselves isn’t as compelling but that fact is less noticeable than the count of the beats. Adjusting for beta, 14 of the 25 reporting stocks outperformed the index in the subsequent session. That suggests the investors are less surprised by the results than the analyst community. Again, this is not unusual although the divergence seems a bit wide.
Regardless of the under-the-hood details of the earnings season so far, the mood is good and improving. The attitude of the stock market is that the ugliness of March is behind us. An outburst of violence in Iran or the Strait of Hormuz will jolt the market badly but that is not expected anymore.
See you tomorrow.
-Mike
Visdom Market Commentary
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