So much for the weak earnings blast this quarter and those fears that the Fed’s rate rises had slowed the economy to stall speed – if Wall Street’s record double closing on Tuesday is any guide, the chances have risen that the US central bank will start to become worried about the economy rebounding.
The S&P 500 index added 25.71 points, or 0.9%, to a record 2,933.68, and the Nasdaq jumped 105.56 points, or 1.3%, to a record 8,120.82.
Shares in Amazon (due to report March quarter results on Friday morning, our time) jumped 2.2% and was the biggest boost to the S&P 500 and the Nasdaq.
The Dow was left out of the record day – it rose 145.34 points, or 0.6%, to 26,656.39, less than 1% away from its all-time high.
The S&P 500 erased all the steep losses it saw late last year by ending the day above the previous record reached on September 20. It closed just 0.3% below its intra-day record of 2,940.91 hit on September 21.
The S&P has risen 17% so far this year, with help from a dovish Federal Reserve and continuing hopes of an end to the US-China trade war.
On top of that fears of a weak first-quarter earnings season have been reversed this week – especially on Tuesday – with a spate of better than expected earnings reports from the likes of Hasbro, Snap, Twitter, Coca Cola, Lockheed Martin, United Technologies and Verizon.
Reuters says that profits of S&P 500 companies “are still expected to decline 1.3% in the first quarter, in what analysts say could be the first earnings contraction since 2016. However, forecasts have largely improved since the start of April.”
Friday will provide the first update on first-quarter growth with the GDP report to be issued around 10.30pm Sydney time on Friday.
The Fed is currently sitting and waiting after changing its policy stance earlier this year (like the RBA did in Australia along with other central banks such as the RBNZ).
The Fed meets on April 30 and May 1 and won’t be changing its stance, but the message from Wall Street is that investors believe the bad news is being left behind and the outlook is brightening.
The question after next week’s Fed meeting and statement will be when will the central bank start hinting at a new round of rate rises as the economy strengthens into 2019.
Oil prices again rose – but much less than on Monday. West Texas Intermediate crude for June delivery rose 1.1%, to settle at $US66.30 a barrel on the New York Mercantile Exchange. In Europe, June Brent crude was up 0.6%, at $US74.51 a barrel. Both settlements were at the highest since last October.
However gold prices fell to new lows for 2019. Comex gold for June delivery lost $4.40, or 0.3%, to settle at $US1,273.20 an ounce in New York – the lowest settlement since December 26. May silver futures lost 1.2% to end at $US14.791 an ounce, while May Comex copper futures eased 0.3% to $US2.894 a pound.
