In fact, historically, we know that the stock market is a leading indicator for the economy, as the market has always turned well before the economy does.
Yet, when you consider how many continually fight this market rally, and the fact that this is the most hated market rally in history, it would make sense that it will simply continue until most of the market finally embraces the bull.
When the news of such improved earnings finally hits the market, most market participants have already seen the stock of the company move up strongly because investors effectuated their positive sentiment by buying stock well before evidence of positive fundamentals are evident within the market.
So, as more and more bears will likely become convinced of the stock market rally, this is exactly what is needed to be seen before the market is able to strike any real top.
For this reason, we see the stock market lead in the opposite direction before the economy and fundamentals have turned.
as informed in
Stock Market News for May 08, 2017
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as informed in
Growth stocks, as expected during market expansion, have been leading the way but saw difficulties in the most recent quarter.
U.S. factory orders increased 0.2% in March with durable goods, which include machinery and automobiles, adding to the thesis of peak levels and the possible contraction period.
Durable goods trade cyclically and do a good job at indicating where an economy is in the business cycle.
Modest inflation may actually stimulate economic growth as the increase in prices stimulates private business investments.
During expansionary periods, infrastructure building and high-cost projects are initiated and drive spending for said durable goods.