“Momentum does have a habit of feeding on itself,” said Michael Shaoul, chief executive officer at Marketfield Asset Management. In the process, both hit their highest levels since early last year.Īccording to adherents of a century-old charting technique called the Dow Theory that posits both groups are harbingers of future economic growth, simultaneous strength is a bullish sign. The Dow Jones Industrial Average climbed for 10 straight days, the longest winning streak in six years, while a similar measure tracking airline, railroad and trucking companies rose for four weeks in a row. The latest evidence comes from synchronized breakouts in transports and industrial stocks. While skeptics keep pointing to one widely watched recession indicator - the inverted yield curve in Treasuries - as a warning that the economy is not out of woods, the equity market is telling a different story. From small-caps to energy and banks, economically sensitive shares are driving the latest leg up. What started as a rally driven almost entirely by a handful of technology megacaps has morphed into a cross-sector surge fueled by fading recession fears. If the index completes a round trip by September, it will make a full recovery twice as fast as the average of the previous 12 cycles, data compiled by Bloomberg shows. Up 27% from its October trough, the S&P 500 is now about 5% away from reclaiming its all-time high of 4,796.56 reached in January 2022. “As people have to get right sized on their portfolio, they’re going to have to come in and buy, and every day gets harder.”Īlmost $10 trillion has been restored to equity values in the past nine months as job growth, consumer spending and corporate earnings defied doomsayers. “I’m shocked that the Fed has really pulled off the soft landing and everybody is caught underweight equity exposure,” said Dennis Davitt, co-manager of the MDP Low Volatility Fund who recently adjusted its positions to prepare for more market upside. Should the optimism persist, last year’s bear market has a shot at being unwound faster than all but three of its predecessors since World War II. That some signals coming from the US economy are nowhere near as buoyant - and that Federal Reserve policy makers sound only marginally less worried about inflation now than they did then - is but a nuisance for investors who just pushed stocks up for the eighth time in 10 weeks. Rather than foretelling trouble, chart patterns tracking everything from cross-asset momentum to transportation companies are painting a picture of burgeoning economic vigor. Oil Trader Vitol Doubled Average Pay on Record $15.1 Billion ProfitĪnd yet fewer than 20 months after it began, the bear market that engulfed the S&P 500 is a mere 260 points from being completely erased. Why South Africa Is on the Brink of Chaos US Recession Becomes Closer Call as Economists Rethink Forecasts Putin Warns Poland Over ‘Aggression’ Against Ally Belarus The Bear Market Has Nearly Been Erased, Fewer Than 20 Months After It Began Practically everyone saw a recession coming. The bond market was flashing dire warnings. Jerome Powell was waging war on inflation.
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