What's going on?
US stocks hit an all-time high on Monday following strong job figures on Friday. The big move comes just ahead of “earnings season,” when all US public companies will tell investors how they performed in the last quarter. There’s a lot going on with US stocks right now!
What does this mean?
The fact that stocks broke above their all-time high (which was set in May of last year) is probably a positive in itself. “Technical” strategists view things like all-time highs as natural barriers of resistance that create a ceiling that takes an extra effort to “punch through.” The fact that investors felt confident enough to break through that ceiling is an indication of generally positive sentiment – and that’s the sort of attitude that helps propel stocks even higher.
Why should I care?
For the markets: Expectations are high for bigger profits in the second half of the year. Companies’ results over the coming weeks are likely to show that profits declined for a 5th straight quarter. That sort of weakness hasn’t been seen since the depths of the 2008 financial crisis. However, many investors think that companies’ profits will start increasing again in the next few months – and get even stronger in the 4th quarter. What companies’ CEOs say about their expectations for the rest of the year is likely to be at least as important as how they performed recently.
The bigger picture: We’re about to hear very specific and detailed information from most of the world’s biggest companies – which is worth paying attention to! Facebook, Apple and McDonald’s might all be American companies, but their operations and earnings are global. Their results will certainly say a lot about the US economy – and Americans’ general economic well-being. The information will also shed light on how the rest of the world is doing because of their large, global footprint.