ECONOMIC REPORTS AND EARNINGS DRIVE U.S. EQUITY PERFORMANCE
U.S. indices have been climbing steadily higher, driven by an increasingly rosy picture for the U.S. economy, and solid corporate earnings thus far for the second quarter of 2018. Federal Reserve chairman Jerome Powell helped underscore the economic growth in the U.S. on Tuesday and Wednesday, testifying on Capitol Hill and reinforcing both the strong U.S. economic growth, and the notion that interest rates would continue a steady march higher every three months. The Fed chairman’s words got confirmation on Wednesday as the Beige Book pointed anecdotally to solid growth in 11 of the 12 Federal Reserve districts. Only St. Louis reported slight growth, while the other districts reported growth that was moderate or better. Adding to the optimism over the economy has been corporate earnings results so far this quarter. Although earnings season is just getting started, so far data shows that 90% of the companies who have reported have beaten expectations for revenues and profits. There are some clouds on the horizon however, with the Beige Book also noting that the U.S. economy could have trouble making its next leg higher due to a lack of skilled workers and rising raw materials prices.
Any troubles are likely far off, with the Fed chair seeing no signs of an impending recession, and with Larry Kudlow, economic advisor to President Trump, saying Wednesday at a CNBC event that more pro-growth measures could be imminent.