Market Follows Through for Second Day
By Laif Meidell, CMT, President of American Wealth Management, and Portfolio Manager of the AdvisorShares Meidell Tactical Advantage ETF (NYSE Arca: MATH) and the AdvisorShares Market Adaptive Unconstrained Income ETF (NASDAQ: MAUI)
Mention the term “follow-through” in a sports bar and images of a golf swing might come to mind. But the stock market can also experience a “follow-through” of sorts, such as we saw on Wednesday, as the major market averages continued higher for a second day in a row. In fact, it was the first time in over a month that the Standard & Poor’s 500 was able to pull off what may seem like a reasonably simple feat, putting together two winning days back to back. For perspective, this means that every one-day rally over the past month has been followed by a bout of selling, taking prices lower, until this week. The Dow Jones Industrial Average rose 0.82 percent and the Nasdaq Composite gained 0.70 percent on the day.
So what has changed? Frankly, there are no clear answers, but there are some clues to include rebounding European stocks. For one, with all the concern over the Brexit (United Kingdom exiting the European union), European investors now appear less worried such an event will take place. Additionally, more good news came on Tuesday as European finance minters and the IMF agreed to restructure Greece’s debt when it come due in 2018. This means another tranche of money will be made available to Greece, when the time comes, to help it refinance its debts.
Though it may seem counterintuitive given the market’s behavior over the past eight years, financial reporters have been talking this week how investors are getting comfortable with the idea of higher interest rates as early as June or July.
Oil prices were spurred higher on Wednesday, with light crude oil futures nearing $50 per barrel, after the Energy Information Agency’s weekly petroleum status report showed that oil inventories declined by 4.2 million barrels to 537.1 million. Though gasoline inventories were up 2.0 million barrels for the week, the report showed that demand for gasoline was strong, with daily demand averaging 9.6 million barrels a day. This is 3.9 percent higher than a year ago.
Most countries finished positive for the week with no major theme guiding this week’s trends. The top-performing countries for the week were led by South Africa, with the MSCI South Africa index gaining 5.00 percent over the past five trading days, followed by the MSCI All Ireland Capped, index up 4.93 percent over the same period.