With the S&P 500 once more approaching a record in the last few days before dropping back, investors will be looking to various financial reports and the upcoming Fed meeting for pointers on whether to push stocks higher again.
London, England, July 20, 2016 — The S&P 500 got close to the record in response to a rally on Monday which brought it to an 11 month peak. However, the run tapered off towards the end of the week in one of many examples where the benchmark large-cap index has jumped above 2,200 before dropping back from the record of 2,130.96.
“Most equities are finding it very difficult to justify breaking through to a new high,” said Richard Sharpe, Co-Head of Global Mergers & Acquisitions at Acom Tokyo Securities. “What we need is consistent data, whether it is good or bad, that can lead the markets in a particular direction,” he added.
Vital US economic reports are due out early next week including those dealing with inflation and retail sales.
After a mediocre start to 2016 the S&P 500, an American stock market index based on the market capitalizations of 500 major firms, has recovered over 20 percent, mostly due to a bounce back in crude prices.
Even though the signs are encouraging, it seems few people are getting overexcited, even if records are overturned.
Bruce McCain, head investment strategist at Key Private Bank in Ohio said, “We’re not going in all guns blazing on the strength of this. It’s a great sign but the outlook is not what we would describe as bullish. It would be wise to wait on US data coming next week.”
Another useful pointer will be the Fed meeting on Thursday and their comments regarding interest rate hikes. Most investors are certain a hike won’t be announced this time round but the minutes of the meeting will provide valuable clues as to a designated time for the raise.
Retail reports will also give interested parties valuable insight on consumer activity.
However, optimism is being firmly contained as the British E.U. referendum approaches fast. Most investors will stay underweight until the Brexit vote is completed and full data is released for the United States Fed meeting and the Chinese economic recovery figures, where a steel glut is affecting import trade numbers.
Richard Sharpe added, “Our advice at the moment is to stay under and see how next week pans out. If we get some significant market signals then we can act confidently on them when the time is right.”
Acom Tokyo Securities Ltd