Experts Weigh In as S&P 500 Soars to New High on U.S and China Trade Truce

The S&P 500 hit a record high on Monday after Wall Street learned that there was a trade truce between President Trump and Chinese President Xi Jinping this past weekend.

Some experts weighed in on the market heading higher.

According to Gene Goldman, chief investment officer at Catera Investment Management, there are three things causing the market to give mixed signals. He explained, “Number one, you look at economic data starting to cool, but at the same time though we’re still very expansionary. Number two, valuations are a little bit elevated, but earnings growth could weaken especially with an earnings recession this quarter and potentially next quarter. And three, you’re seeing the bond market… we have an inverted yield curve, suggesting a weaker growth down the road. All of this is going to create a lot of market volatility.”

Steven Wieting, the chief investment strategist at Citi Private Bank, remarked, “I’ll take good news. In the event that the economy finds some strengthening here and our trade issues are put behind us, and the Federal Reserve then does not cut, then I would certainly take that. And I think that we will see corporate earnings in the United States in the quarter just passed and the rest of the year rise some. We could derail that if we had a serious worsening of trade issues around the world. If we don’t then I would take that as a positive.”

Jason Hunter, the head of global fixed income at J.P. Morgan, said, “It was defensives that led the move to utilities, consumer staples and it was largely because the very front end of the treasury market repriced 60 basis points in a short period of time. That helped boost the S&P, but more important the rate sensitive groups weren’t really around like the utilities. So, our point was that if the rally is going to continue, if the S&P is really going to break out of the range it requires a rotation to cyclical type groups and you haven’t seen that up until probably early Monday – Tuesday of last week. Semis started to go because there was some individual company news, even things like copper started to rally a little bit. We need to see more of that to get the S&P to continue to rally up. This is clearly a trade story – those are the groups that are the most sensitive to the trade story. So, basically, we need to repeat what we saw in the late fourth quarter and first quarter of this year where it was semis starting to lead the market – copper really starting to move. All those things point to improving PMI [Purchasing Manager’s Index], we basically have to redo that same story all over again here to put a solid foundation underneath the rally. ”