Central banks may have made bond markets wobble, but stocks are still going from strength to strength, says Nicholas Megaw in the Financial Times. Strong US third-quarter earnings have put worries about inflation on the back burner. Profits at S&P 500 firms rose by about 40% year-on-year between July and September. Sales increased by roughly a fifth.
“Large US companies are broadly managing to weather the surge in the prices of raw materials, supply chain bottlenecks and shortages in the labour market,” say Joe Rennison and Colby Smith in the same paper. Corporate profit margins have fallen back slightly, but by much less than analysts had been expecting.
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“It doesn’t get any better than this for the stockmarket,” says Ben Levisohn in Barron’s. A “stellar” jobs report – the US economy added 531,000 jobs last month – only adds to a picture of an American economy regaining its vigour after a sluggish summer. There is growing hope that new antiviral treatments from Merck and Pfizer will soon draw a line under the pandemic era.
To top it all, Congress has finally approved a $1.2trn infrastructure bill after months of wrangling. Equities fell by 5% in September, sparking talk of a correction (defined as a stockmarket decline of 10%). Instead, equities have since rallied by 7%. Is that a reason to sell? With the bulls out in force, probably not. “Bet on a rip-roaring rally into the end of the year.”
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Pierre-Édouard Stérin wants to make France great again
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