The Fed’s Beige Book echoed what we have seen in other recent economic reports. That being a modestly improving US economy. Unfortunately that peppier tone was not good enough to stop Wednesday from being the 4th straight day of losses for stocks.
Pulling back to the bigger picture, this just looks like another consolidation period for a market intent on hitting new highs. To make that a reality we need economic data to stay on its current healthier track. And we need this earnings season to surprise to the upside. Both are likely outcomes.
Unfortunately there is a 3rd factor which might mitigate the above factors. That is the tightening of the US presidential race. As pointed out numerous times in this column, investors disdain uncertainty. Therefore, the unclear final outcome of this election may put the market on hold til early November no matter the status of earnings or the economy.
Don’t Quit on the Market Just Yet
Too often customers read about a trading range or consolidation period with the assumption it’s time to head away from stocks. That would be foolish.
Gladly we are in the midst of earnings season which always offers a great opportunity to latch onto exceptional companies ready to soar.
Best,
Steve Reitmeister (aka Reity… pronounced “Righty”)
Executive VP, Zacks Investment Research
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