The Dow and S&P are trudging toward ending with losses for the week, as “Trump to Comey: You’re fired!” remains the news story that keeps on giving.
President Donald Trump is showing no signs that he will resign as the FBI firing controversy rages on, even if Democrats are dreaming of impeachment. Nonetheless, stock pundits are talking about how the market might react to such a move.
“What would U.S. stocks do if President Trump suddenly resigned? Based on recent price action, the answer is clear: Rally 3-5%, at least, over a day or two,” says Convergex’s Nick Colas for our call of the day.
“U.S. equities see through the headlines (like the Comey firing) and essentially believe two things,” the chief market strategist writes. “First, corporate earnings are growing nicely. Second, the Republican-led Congress needs to pass tax reform by the 2018 midterm elections.”
The market will “favor anyone who can push item #2 to a speedy conclusion while not screwing up #1,” Colas says. Another driver for stocks is long-term interest rates are going nowhere, he adds.
The strategist trots out data on correlations to back up his take.
“Average S&P large-cap sector correlations dipped in the last month and are averaging just under 60% YTD. That’s a clean 20 points lower than the 2009-2016 experience and shows fundamentals now matter again,” he says.
It’s a prediction that might not sit well with many people — investors who think stocks have rallied enough already, Trump’s fans, anyone tired of the Comey story, #Resist folks who want an impeachment rather than a resignation, and so on.
“Not sure I agree,” Ritholtz Wealth Management’s Josh Brown writes over at his Reformed Broker blog in response to Colas’s take. But Brown adds that it does fit with his own view that “the Trump Trade, if there ever were such a thing, ended five months ago, and the new reason for bullishness has become plain and simple earnings growth.”
Key market gauges
Futures for the Dow
, S&P 500
are little changed. The Dow
are down a respective 0.4% and 0.2% for the week as of yesterday’s close, after scoring three up weeks in a row, while the Nasdaq Composite
is 0.3% higher.
See the Market Snapshot column for the latest action.
So suggests Market Anthropology’s Erik Swarts, as he provides the above chart. It shows how he thinks Spanish stocks (the red line) are behaving like Japanese stocks in the late ’90s (the black line). He sounds downbeat on U.S. stocks, too.
“We have a strong suspicion that the wisdom of crowds today in stocks has created enough distortion from reality that it makes sense to walk away from it,” Swarts writes.
Let’s make a trade deal: The Trump administration and Beijing have agreed on measures that ought to lead to better access to China for U.S. beef producers, payments providers and other industries.
20 years old — That will be the age of Amazon’s stock
come Monday, as its first day of trading was May 15, 1997. It was at $2 back then (adjusting for splits), as Barron’s has noted. Shares closed around $948 yesterday.
The Chicago Fed’s Charles Evans was scheduled to speak in Ireland ahead of the opening bell, and the Philly Fed’s Patrick Harker is on tap to talk at Drexel University around lunchtime.
Check out: MarketWatch’s Economic Calendar
“Attention in the water: … You are paddleboarding next to approximately 15 great white sharks.” — the Orange County Sheriff’s Department delivered that warning this week to a group of paddleboarders from a helicopter. That led to the group making it back to shore unharmed and a viral video.
Don’t forget about Mother’s Day this weekend — or the holiday’s dark history.
This couple will wed after losing 600 pounds together.
And a marriage proposal has stolen the show in the Eurovision Song Contest.
Remember Zika? Brazil says its public health emergency is over.
Lawyer for man dragged from United flight isn’t laughing at viral New Yorker cover.
A Harry Potter prequel that J.K. Rowling wrote on a postcard has been stolen.
Is that you, Goldman? A giant squid the size of a cargo container stuns locals:
— The Sun (@TheSun) May 12, 2017
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