The stockmarket rally has found a ceiling

On Monday America’s S&P 500 stockmarket index entered positive territory for the year, before falling back. This rally may have found its top.

Ship at a container terminal in Busan, South Korea.
Key global indicators, such as Korean exports, have improved markedly over the past two months
(Image credit: © SeongJoon Cho/Bloomberg via Getty Images)

Who says markets are rational? asks John Authers on Bloomberg. Academics tell us that the market dispassionately crunches data to determine prices, but psychology still matters. On Monday America’s S&P 500 broke through the level at which it started the year before falling back. Whenever stocks enter positive territory for a year that has seen so much go wrong, even market bulls seem to start looking “for reasons to sell”. This rally may have found a “hard ceiling”.

This week saw the start of the US second quarter earnings season, giving investors an opportunity to gauge the damage wrought by lockdowns, says Michael Wursthorn in The Wall Street Journal. Analysts expect S&P 500 earnings to have fallen by 45% on a year before.

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Markets editor

Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019. 

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere. 

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful. 

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.