Stock Markets Set to Move Higher on Strong Economic Fundamentals

By Joyce Yu

Philadelphia, PA–It turned out that Wall Street’s bull run hasn’t ended. U.S. stocks rebound Thursday following a brief setback a day ago.

This came after China’s State Administration of Foreign Exchange on Thursday denying a report that Beijing was considering slowing or halting its purchases of US debt. The regulator said in a statement  “We believe this information may have been attributed to the wrong source or could be fake news,” adding that the government departments which manage China’s reserves “are all responsible investors, and related investment activities have promoted the stability of international financial markets and the preservation and appreciation of China’s foreign exchange reserves.”

Bloomberg recently, citing people familiar with the matter, reported that Chinese officials think U.S. debt is becoming less attractive compared to other assets, adding that trade tensions between the two countries could provide a reason to slow down or halt the purchases. While traders have tried to leave behind some of the concerns that led to Wednesday’s declines, they’re still eager to find fresh reasons – tax bills, economic data and earnings reports – to extend the rally.

In its earing report released this morning, Delta Air Lines posted fourth-quarter earnings that beat Wall Street’s expectations, raising its 2018 guidance about 20%. Delta’s shares were up 1% in early trading Thursday.

Former J.P. Morgan Chief Equity Strategist, Fundstrat’s Tom Lee wrote in a note to clients that the market will have another double-digit percentage gain this year, driven by earnings growth of more than 13% and strong global growth. He further set a 3,025 year-end price target for the S&P 500, representing 10% upside to Wednesday’s close.

Some analysts remain less aggressive though. Wall Street legend Byron Wien, vice chairman of Blackstone Private Wealth Solutions, is warning investors that a 10 to 15%% stock market pullback is almost unavoidable. Speaking on CNBC’s “Trading Nation” on Wednesday, he noted sentiment is bordering on the euphoric state. When investors think they can’t get into trouble, they usually do. “We’re vulnerable to a correction.”

He predicts the S&P 500 in 2018 will add 9% from current levels as long as the 10-year Treasury yield stays below 3%.