Why is the S&P 500 (SPY) making new highs? And what’s the outlook for shares coming into the fairly vital 1/31 Fed assembly? Funding professional Steve Reitmeister shares his views together with a preview of his prime 13 trades to excel in weeks and months forward. Learn on beneath for extra.

I’m a tad bit stunned by the current surge to new highs. Not that it would not happen this 12 months. That was a given.

Somewhat why it passed off now with such blended financial and inflation information calling into better query WHEN the Fed will begin decreasing charges.

But as everyone knows timing the market can typically be a “idiot’s errand“. Gladly our bullish outlook for the 12 months forward had us absolutely invested and having fun with within the upside because it rolled in.

Let’s use our time right now to debate the outcomes from earnings season to this point. And making ready for the subsequent Fed assembly on January 31^st.

Market Commentary

Tuesday marks the three^rd straight shut above 4,800 for the S&P 500 (SPY) serving to to solidify that certainly we’ve got a stable breakout to new all time highs. Actually, that’s one thing to rejoice serving to to erase many of the painful recollections of the 2022 bear market.

Serving to the trigger are the higher than anticipated early outcomes for This autumn earnings season. Listed here are insights from my buddy Nick Raich at EarningsScout.com

• 67 firms within the S&P 500 (13%) have launched This autumn outcomes.
• Excellent news first! 56 firms, or 84%, have topped their EPS expectations, on common by +6.92%.
• Moreover, 4Q 2023 EPS development is up +6.37% from 4Q 2022 for the businesses which have reported to this point, which is an accelerated price from final earnings season when their collective 3Q 2023 vs 3Q 2022 EPS development price was +4.42%.
• Now, the unhealthy information. And to be trustworthy, it isn’t all that unhealthy. Solely 67% of firms are topping their gross sales expectations, which is beneath the 72% three-year common gross sales beat price.
• Whereas 4Q 2023 gross sales are up +4.98% from 4Q 2022 for the 67 firms which have reported, it is a slowdown within the price of development from final quarter when their 3Q 2023 gross sales have been up +6.01%.
• Underlying S&P 500 EPS expectation development is bettering, on a price of change foundation, for the primary 67 co’s within the index on the 4Q 2023 clock and that is bullish for shares.

The above could also be a bit an excessive amount of within the weeds for some buyers. So let me simplify.

Earnings to this point are higher than anticipated. And estimate revisions for future earnings are additionally constructive. Web-net that is excellent news and little doubt one of many catalysts behind the current inventory breakout to new highs.

These constructive earnings bulletins shouldn’t come as a lot of a shock given the resilience of the US financial system. The GDPNow mannequin is now pointing to +2.4% development for This autumn which is much better than earlier predictions nearer to a paltry 1%.

The welcome power of the US financial system, coupled with nonetheless moderating inflation figures, creates an attention-grabbing riddle for the Fed to resolve as to once they can comfortably begin decreasing charges. That’s extremely unlikely at their 1/31 assembly the place the CME’s FedWatch mannequin factors to lower than 3% probability of a price minimize on the way in which.

The March 20^th Fed assembly was thought-about the most certainly launching level for these price cuts with odds at practically 90% only a month in the past. That’s now right down to solely 43% likelihood presently.

This modification of coronary heart stems from the marginally increased than anticipated CPI report on January 11^th the place core is at present at 3.4% 12 months over 12 months. Together with that the month-to-month jobs report confirmed job positive aspects hotter than anticipated bringing with it cussed wage inflation that’s not abating as quick as some had hoped.

Lengthy story quick, we’re nonetheless a great way off the Fed’s 2% inflation goal thus delaying when the financial catalyst of price cuts will lastly be on the way in which. Now people imagine that Might 1^st Fed assembly is the extra possible begin to this price chopping course of (at present 86% chance).

Sure, with what I simply shared I’m a tad stunned that shares had the vitality to interrupt to new highs presently. I assumed that may be on maintain til there was better certainty of when price cuts could be delivered as that timeline retains getting pushed additional again.

Nonetheless, it isn’t laborious to see the financial system is doing simply effective with out the speed cuts. So its not like we want them on the books to maintain the inventory market buzzing alongside. It will simply present a bit extra oomph to earnings development which additional lifts share worth valuation.

The purpose is that when the first development is bullish, then there is no such thing as a profit in attempting to time the minor pullbacks and bounces. Like I mentioned up prime, that may be a “idiot’s errand”.

It’s higher simply to remain 100% invested in the perfect shares and ETFs to take pleasure in these rallies at any time when they arrive.

As for what are the perfect shares and ETFs to personal now, we’ll sort out that within the part that follows…

What To Do Subsequent?

Uncover my present portfolio of 11 shares packed to the brim with the outperforming advantages present in our unique POWR Rankings mannequin.

Sure, that very same POWR Rankings mannequin producing practically 4X higher than the S&P 500 going again to 1999.

Plus I’ve chosen 2 particular ETFs which are all in sectors properly positioned to outpace the market within the weeks and months forward.

These 13 prime trades are based mostly on my 43 years of investing expertise seeing bull markets…bear markets…and all the things between.

In case you are curious to be taught extra, and wish to see these fortunate 13 hand chosen trades, then please click on the hyperlink beneath to get began now.

Steve Reitmeister’s Buying and selling Plan & High Picks >

Wishing you a world of funding success!

Steve Reitmeister…however everybody calls me Reity (pronounced “Righty”)
CEO, StockNews.com and Editor, Reitmeister Complete Return

SPY shares have been buying and selling at $484.86 per share on Tuesday afternoon, up $1.41 (+0.29%). Yr-to-date, SPY has gained 2.01%, versus a % rise within the benchmark S&P 500 index throughout the identical interval.

Concerning the Creator: Steve Reitmeister

Steve is healthier identified to the StockNews viewers as “Reity”. Not solely is he the CEO of the agency, however he additionally shares his 40 years of funding expertise within the Reitmeister Complete Return portfolio. Be taught extra about Reity’s background, together with hyperlinks to his most up-to-date articles and inventory picks.

Extra…

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