MarketBites: Markets Continue To Shine
Portfolio Manager Commentary:
U.S. stocks continued to climb on Monday, extending their winning streak. On the other hand, commodity prices dipped after concerns about slowing growth in China. Out of the S&P 500’s 11 sectors, only energy and material stocks declined. Consumer staples and utilities were the two top-performing sectors of the group. Investor sentiment that the Fed will increase rates at a slower pace is a main driver for the continued market growth.
Investors are split on whether they believe markets are seeing a real bounce or if worse is yet to come. Eric Hale, the founder of Trader Oasis, said that “traders are looking for reasons to not believe in this rally.” He also mentioned he believes markets are seeing a real bounce and that valuations have fallen far enough. Still, others like Peter Boockvar, the chief investment advisor of Bleakley Financial Group, think differently. He believes the rebound is a bear market rally when considering the Fed’s aggressive monetary policy, sticky inflation, companies’ monitoring profit margins, and risks of a slowing economy.
Moving forward, investors will be focused on where interest rates will go and whether or not earnings will keep coming in strong.
Chart of the Day:
As tensions between China and Taiwan escalate, people are becoming more concerned about the microchip supply chain. Taiwan accounts for roughly 70% of the world's microchip supply, with TSMC holding more than half the world's market share. A potential Chinese blockade of Taiwan would have catastrophic effects on all sorts of industries worldwide.