NEW YORK - U.S. President Joe Biden’s massive infrastructure proposal and the upcoming corporate earnings season could offer investors fresh insight on the sustainability of a rally that has taken stocks to all-time highs.
Evidence of strengthening economic and corporate growth could support investor confidence after a quarter that saw solid stock gains but also a worrying surge in bond yields and pockets of market volatility, including the wild ride in GameStop shares and the meltdown of highly leveraged family office Archegos Capital.
Recent history suggests stocks could keep rolling this month, with the S&P 500 tallying its highest average gain in April out of any month over the past 20 years, according to Ryan Detrick, chief market strategist at LPL Financial. Economists at Jefferies estimate Biden’s infrastructure plan overall could add 0.5 to 1 percentage points to their estimate of 5.2% growth in U.S. gross domestic product in 2022.
“From a market perspective, that cyclical/value area that has been working should have another leg in the second quarter as we see things like this infrastructure package maybe add some more fuel,” said Anthony Saglimbene, global market strategist at Ameriprise. “The market has digested the initial news very well...,” Todd said. “My concern is potentially the next round may be more expansive on the tax front than people are expecting.”
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