U.S. Stocks Set To Keep Riding Trade-Deal Optimism Higher
Stock futures are rising, with markets headed for another positive session on Thursday.
U.S. stocks are set for another day of gains on Thursday, as investors keep up a positive read of the trade-deal tea leaves and watch out for an OPEC meeting.
Stock futures were climbing on Thursday, as a fresh bout of optimism set in over U.S.-China trade talks. That is after Chinese officials reportedly indicated that delegates on both sides remain in “close communication.”
A day after the Dow and S&P 500 broke a three-day losing streak, following a report that a phase one U.S.-China trade deal was still in the works, Dow futures were up over 100 points. Thursday’s fresh report on those negotiations also said that Beijing wants Washington to roll back tariffs on its imports in order for the two sides to reach a trade deal.
Investors will be watching for more economic data, with weekly jobless claims on the way, alongside an update on the trade deficit and factory orders due later.
Shares of Slack are surging in premarket trading after the communications software company topped a disappointing forecast with stronger sales growth.
To be sure, stock market bears have had few breaks this year. Our call of the day comes from JonesTrading’s chief market strategist Michael O’Rourke, an unrepentant bear who sees little reason to dive in now, even if he has missed gains this year.
“We have been in an environment of deteriorating stock fundamentals, a weak global economy and a decelerating U.S. economy, against a backdrop of a historically expensive market,” he tells MarketWatch. Despite strong gains, the S&P 500 is just under 10% above its 2018 high, while the Russell 2000 is below its 2018 high.”
What has happened in the past couple of years is that company earnings growth has been “artificial,” driven by the administration’s tax cuts, he argues. That should mean that investors should assign a lower valuation, but they aren’t doing that, which is “dangerous.”
“I will become more constructive on the equity market as it begins to approach that historic 15x to 16x earnings multiple within a stable economic environment,” says O’Rourke. Read more of his thoughts here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.