Earnings season is almost over in the US, so the upcoming releases are unlikely to influence market sentiment. Investors are turning their attention back to macroeconomic data.
For example, this week investors will be closely watching core consumption data in the United States this Friday. A 0.3% increase is expected in April, with the annual rate cooling to 2.7% from 2.8%.
Although the data will be lower than expected, it may not lead to an immediate change in the Fed's monetary policy. Still, it could influence regulators' tone and adjust market expectations.
This would be good news for risk assets. However, despite recent upbeat inflation data, it is too early to declare victory. Things could change quickly, and geopolitical tensions are not helping.
Speaking of which, international shipping costs have soared as shipowners prepare for potential disruptions to global supply chains during the fall when retailers typically import holiday goods.
Prices have not yet surpassed the peak reached after Yemen's Houthi militants began attacking ships in November, but they are rebounding during a normally quiet period for shipping. Let's see how it affects the overall PCE.
The fact that consumer demand is not as depressed as companies feared also increases the need for shipments and, consequently, prices.
For now, however, markets seem to be ignoring potential triggers for a slowdown.
In addition to a stronger-than-expected economy and persistent consumer demand, corporate share buybacks are also contributing to optimism. Companies repurchasing their shares are historically high, and volumes are expected to rise soon.
By 2024, Goldman analysts predict S&P 500 share buybacks will rise 13% to $925 billion and another 16% in 2025 to just over $1 trillion, recovering from last year's decline.
So, will the market frenzy continue?
Over the past two years, many analysts have predicted an inevitable stock market collapse. It has not happened, and those holding short positions have lost money.
However, to base the belief that a correction will not occur on this alone is foolish. However, as long as plenty of money is in the market and expectations for the future are optimistic, the bears will be challenged.
As investors navigate through these market dynamics, utilizing a stock screener can help identify potential opportunities amidst the noise and uncertainty.
Also, let's not forget that 2024 is an election year. The ruling party may try to keep the market in the green for as long as possible. At least, that's the rumor...