US stocks rose to a new all-time high on Tuesday after the release of strong corporate earnings. The data showed that the US economy picked up in the first three months of 2021.
However, one of the largest companies, Apple Inc., reported a slowdown in growth to 2.6%. They also project that future performance may decline due to decreasing chip supply.
Meanwhile, Ford Co. and EBay Inc. reported drawdowns due to weak profits.
Facebook Inc., on the other hand, maintained growth and hit an all-time high after surpassing forecasts.
But despite mixed reports, US GDP still grew 6.4% in the first quarter, while jobless claims fell to a new low last week.
With this, Chris Zaccarelli, investment director in Independent Advisor Alliance, said clashing opinions have risen between those who think the strong corporate earnings are a sign for economic boom, and those who believe that we are already on the peak of growth so the markets are unlikely to rise higher.
And even though the latest data on GDP supports the Federal Reserve's strong economic outlook, the central bank is not yet convinced that it is time to end support measures. In fact, Fed Chairman Jerome Powell dismissed fears of a price spike or anecdotes about labor shortages, citing that the government is ready to give more aid to the economy if needed.
US President Joe Biden has already unveiled a new spending plan worth $ 1.8 trillion, and its main target is to aid American families.
Investor sentiment has spiked because of this, ending the split opinion that manifested in the past few days due to robust economic data and possibilities of an early easing of support measures.
Mark Haefele of UBS Global Wealth Management also said that all data points to continued support from both fiscal and monetary. As such, markets may move further, with cyclical parts such as financial, energy and value stocks benefiting the most.
The S&P 500 soared by as much as 0.5% on April 29.
