If the economy is as strong as the Fed is worried about, that's going to mean better corporate earnings. The driver is rotating from front-end consumer to back-end business spending. And business spending is being driven by the need to continually improve productivity, which brings in tech spending.
More Quotes from John Augustine:
It seems the storm is not going to be as strong as we feared and that was enough to take some of the selling pressure off stocks today. We are not likely to see real stock-buying this afternoon as most investors still want to see what happens with the storm during the weekend, but if damage is minimal, we might be bound for a rally on Monday.John Augustine
Earnings are driving the testing of the top end for the SP 500, but geopolitical issues are here to stay for some time. That will put downward pressure on the stock market.
John Augustine
Technically, we already saw this in 2005, since the SP 500 up 4.91 slightly beat the Russell 2000 up 4.55. But now in 2006, we are seeing a migration to large caps and mega caps. Some of this rotation is due to an expected slowdown in overall corporate profits. During such an environment, investors are more comfortable with large-cap companies, which are stable and more consistent in performance.
John Augustine
We could be into mid-July until we see the Dow break that record. It may take another round of earnings to give it that push.
John Augustine
Retailers came out with pretty good reports. One would think we'll see a pretty good retail sales number, and that would give support to the market, absent much higher core inflation numbers.
John Augustine
This may be one of those years in the stock market where you'll want to sell on Memorial Day and go away until Labor Day.
John Augustine
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