“What we’ve seen since June is market participants reengage pretty actively,” Arvin Soh, a New York-based portfolio manager with GAM, said by phone. His firm has more than $48 billion under management. “We’re off to a good start in the earnings season. Confidence is pretty high. Certainly, if you were say to say ‘do we know of many people that are bearish right now?’ Absolutely not.”
Data today showed purchases of previously owned houses fell 1.2% to a 5.08 million annualized rate last month, according to the National Association of Realtors. The median forecast of 79 economists surveyed by Bloomberg called for a 5.26 million pace. The pace of the demand was the second strongest since November 2009 following May’s downwardly revised 5.14 million rate.
In Asia, Japanese election results from the weekend strengthen Prime Minister Shinzo Abe’s ability to carry out his policy of monetary easing, fiscal stimulus and deregulation.
The broadest rally in U.S. stocks since at least 1990 has lifted shares of everything from the smallest companies to the biggest banks, signaling the bull market for America’s largest corporations will last at least until the end of the year, if history is a guide.
The S&P 500’s advance to a record last week coincided with highs in the Russell 2000 Index of smaller companies, the Dow Jones Transportation Index, the S&P 500 Financials Index and a gauge of economically sensitive equities overseen by Morgan Stanley. Since 1990, the S&P 500 has gained for six months on average after those measures peaked, according to data compiled by Bloomberg.
While bears say the breadth shows indiscriminate buying just as profit growth slows and the Fed prepares to curtail stimulus, gains across stock measures have proved an accurate forecaster of performance. In four market tops during the last 23 years, small-cap stocks and the cyclical gauge never peaked after the S&P 500.
About 84% of stocks in the index traded above their average prices from the past 50 days as of the end of last week, according to data compiled by Bloomberg. While that’s below a 19-month high of 93% reached in May, it’s up from its 2013 bottom of 12.8% in June. There were 84 stocks in the index that closed at a 52-week high yesterday and only one at a 52-week low.
More than 150 S&P 500 companies, including Apple Inc., Amazon.com Inc. and Facebook Inc., report their earnings this week. Of the 108 companies on the gauge to have already reported quarterly results, 71% have exceeded analysts’ profit estimates and 52% have beaten sales projections, data compiled by Bloomberg show.
The Chicago Board Options Exchange Volatility Index, or VIX, slid 0.2% today to 12.54 for a fourth straight decline. The equity volatility gauge, which moves in the opposite direction as the S&P 500 about 80% of the time, reached a six-month high in June and has since fallen 39%.