Record Highs Hold Steady on Wall Street

US stocks opened with a positive outlook on Monday, changing very little from record highs as the market closed last week. Apparently, investors are shifting interest towards a busy earnings week from many of the biggest companies in America. This includes big names like Johnson and Johnson, IBM, and Microsoft.

For example, the Dow Jones Industrial Average fell by only 0.03% while the Standard & Poors 500 Index fell only 0.01 percent; the Nasdaq Composite fell 0.05 percent. And, again, while these numbers are down, they have all fallen miniscule amounts from record highs.

As such, Phil Guarco, global investment specialist at J.P. Morgan Private Bank, says, “The U.S. market isn’t cheap right now.”

In fact, 9 of the 11 major S&P sectors were up on the day; the materials index led the rise with a 0.37 bump. At the other end, the financial sector was little changed.

Guarco goes on to say, “Earnings are going to take an important role. We’re in a situation where the corporate profits and the profits they are going to deliver in the future will be of keen interest.”

In addition, CIBC Atlantic Trust Private Wealth Management chief investment officer Dave Donabedian shares, “After new highs that we saw last week, the market deserves a rest as investors await big earnings this week. Our view is that right now the equity market is a one-legged stool that’s driven by earnings and we’re pretty optimistic about earnings but if that should falter, the market will falter.”

Analysts now estimate that second-quarter earnings for the S&P 500 companies, so far this year, rose by more than 8 percent from the year prior. Furthermore, first quarter earnings showed what they determined to be the best performance since 2011. Actually, the S&P 500 has been trading at about 18 times the earnings estimate, which is far better than the long-term trading rate of 15 times the earnings estimate average.

Also, the financial sector has not changed much since results and forecasts were released on Friday from big banks like Wells Fargo, JPMorgan, and Citigroup, to very little fanfare. We are still waiting on reports from Goldman Sachs, Bank of America, and Morgan Stanley.

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