S&P Reaches a New Peak

Stocks returned to record territory, with both the S&P 500 and the Nasdaq Composite closing at historic highs. The S&P gained 1.20% for the week and the Dow Jones Industrial Average lagged, losing 0.06%. International Stocks also gave back 0.52% while the U.S. Aggregate Bond Index increased by 0.38%.

The S&P took only 17 weeks to fully rebound from its December low on Christmas Eve of 2018.

A Shift in Focus

Last month, Wall Street fixated on trade, reacting to even the slightest hint of progress in U.S.-China negotiations. This month, the trade talks have taken a back seat, and the fixation is on corporate earnings.

Anxieties about a possible earnings recession may be fading. So far, first-quarter results for S&P 500 firms are 5.3% above expectations; that compares to a 5-year average of 4.8%.

At some point, trade talk will come back, or other developments will lead Wall Street to chase other trends. Remember that Wall Street is fickle: what preoccupies it one week may be shrugged off the next. Short-term trends ultimately amount to background noise during the long-term pursuit of investment goals.

A Strong First Quarter

Last Friday, the Bureau of Economic Analysis said that the U.S. economy expanded at a 3.2% pace in the first quarter of 2019. That number surprised many analysts to the upside. Economists surveyed by Dow Jones estimated Q1 gross domestic product would increase 2.5%.

What's Ahead

Investors have all kinds of news to consider this week. There will be a plethora of earnings calls, plus important reports on consumer spending and hiring. Also, Federal Reserve chair Jerome Powell will hold a press conference following the central bank's May meeting.