Stocks stayed pressed up against the all-time highs on Friday. This leg of the bull market was set against a backdrop of mediocre to poor economic data…especially in the manufacturing sector.
The reason for this seeming contradiction is that most investors believe the recent economic weakness is transitory with better results on the way. If true, then the next round of economic reports should sport better data with higher prices as a result. However, if the poor numbers persist, then the natural reaction would be for investors to sell stocks.
I believe that cautious optimism is the right posture for investors at this time. Then keep a close eye on the important economic announcements that come out the first week of June. We will monitor them together and make appropriate adjustments to our strategy.
aka Steve Reitmeister
Executive Vice President, Zacks Investment Research