By Andrew Trimble
U.S. corporate earnings optimism
Toned down trade rhetoric in the U.S. and China allowed traders to focus on the health of corporate America and the picture appears sound. U.S. companies started the earnings season this week with expectations that firms are on their strongest, most profitable footing in years. S&P 500 constituents are expected to announce an average earnings expansion of about 17% according to FactSet which, if it comes to pass, could prove to be a key plank in sustaining the nine-year plus bull market. Meantime, U.S Federal Reserve officials at their meeting last month expressed confidence in minutes released Wednesday that inflation could rise to 2% over the coming years. They also underlined their belief in the strength of the U.S. economy and pledged to allow it not to over heat. Although both comments point to interest rate increases in the coming years the overall message was well-received by markets for its pro-growth bent. Also on the inflation front, eurozone consumer prices picked up in March for the first time in four months while the unemployment level fell to its lowest level in nine years in February. Both prints reinforce expectations that the ECB is on track to meet its inflation and employment goals that will allow it to reduce stimulus. Turning to Canada, the BoC's quarterly survey of businesses released Monday found them to be confident in their outlooks just before the bank's interest rate decision next week.
Stocks bounce back
It was another up and down week but it ended on an up note as major North American benchmarks notched wins through the close Thursday. For the four days covered in this report, the Dow added 561 pts. to close at 24,483, the S&P 500 moved higher by 59 pts. to end at 2,663 and the Nasdaq advanced 225 pts. to settle at 7,140. The TSX was also a money winner adding 62 pts. to finish at 15,269.
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