Investors eye economic data, stimulus measures as stocks rally stalls

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Upcoming U.S. economic data and deadlines for renewing some fiscal stimulus measures in July could prove key tests for an equities rebound that has wavered in recent weeks.

The benchmark S&P 500 has risen about 34% from its late March lows. But those gains have slowed in June, as investors weigh expectations of further stimulus and improving data against a resurgence in coronavirus cases in the United States.

“There’s some evidence that the economy is expanding, but how robust it will be is an open question,” said David Joy, chief market strategist at Ameriprise Financial. One component of Congress’ fiscal aid, a $600 per week supplement to unemployment insurance payments, is set to expire at the end of July.

Even with that recent pullback, stock valuations, as measured by forward price-to-earnings ratios, are near their highest level since the 2000 dot-com boom. Oliver Pursche, president of Bronson Meadows Capital Management, said he recently sold shares of some tech-related companies, such as Amazon.com Inc., in order to raise his cash allocation. Likewise, Richard Grasfeder, senior portfolio manager at Boston Private, has moved to a slight underweight position in U.S. equities.

At the same time, some investors believe expectations that the Federal Reserve is ready to step in with further monetary support should the economy begin to falter will limit the downside in stocks and other risk assets.

 

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Wall Street Week Ahead: Investors eye economic data, stimulus measures as stocks rally stallsUpcoming U.S. economic data and deadlines for renewing some fiscal stimulus measures in July could prove key tests for an equities rebound that has wavered in recent weeks. The wealthy continue to make their last bits of money in the stock market rally before they all pull out and hunker down for the massive economic crush coming our way in August as the temporary benefits expire.
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