Earnings are fueling the current market climate, according to Nuveen chief equity strategist Robert Doll’s recent Barron’s article.
Doll shared the following insights:
- Following what he refers to as a “soft patch,” Doll says recent economic indicators have trended positive–including positive housing starts and continued tightening in the labor market.
- The consumer sector of the economy “remains in good shape.” Although auto sales are lackluster, “overall consumer activity remains respectable.”
- Corporate earnings continue to be strong.
- The banking sector has been particularly robust.
- The probability of fiscal stimulus from Washington is low.
As long as earnings continue to be strong, Doll says, equities should continue to move upward despite policy gridlock. In fact, he argues, continued low interest rates and the weak dollar could end up prolonging the bull market. Overall, he concludes, investor confidence is improving–which could indicate that the current cycle is aging–“but we do not yet think it is approaching an end.”