How to keep the magic going for this stock market?
It’s a multi-layered thing, says our call of the day, from BlackRock’s chief equity strategist Kate Moore. In order for the stock market to keep attracting more buyers and build on gains seen since the start of the year, investors will need to work past several big “milestones” over the next six to eight weeks, she told MarketWatch in an interview on Monday.
The first hurdle involves Wall Street’s next big reporting period, just a few weeks away, and to be sure there’s some fear and trepidation out there right now. “When companies start reporting first-quarter earnings, that’s going to be a real show-me moment,” Moore said.
“If we get early reporters on the cyclical side, sector bellwethers telling us...activity is OK and expectations have been too low, that could lead to another wave of buying in the equity market,” she adds.
Another milestone involves Europe, which Moore reminds us is a big part of the global growth picture. She says investors have been unsettled by persistently weak economic data and signs of civil unrest in places such as France. In short, they want to see things calm down a bit because a slowdown will hit U.S. companies’ globally diverse operations.
And China is holding lots of keys when it comes to further gains for Wall Street. It’s not just the trade story that matters—Moore says the market will be happy with a steady stream of tweets and announcements that indicate negotiations aren’t going pear-shaped.
She says investors really want to see proof that the country’s recent stimulus measures will start kicking in. That means closely scrutinize retail sales from China, but also coming earnings from its major companies and what executives are saying on conference calls over the next few weeks, says Moore.
While that sounds like a pretty long list of demands for a market that had an admirable run since the great Christmas meltdown, it seems investors are just not interested in blind buying.
“A lot of the investors within BlackRock and around the street have been using the big rally in stocks as an opportunity to fade some risk, and rebalancing portfolios. I’d be hard pressed to come up with a segment of our clients that was buying aggressively into this risk rally,” she said.
Read: Why stocks can continue to rally in short term after investors suffered ‘parable of the boiling frog’
What does BlackRock expect? Moore says she can see a “grind higher” coming in the second quarter of this year and they’re sticking to an overweight rating on U.S. stocks.
“Relative to where we were three months ago, we felt the market was significantly undervalued with too many fears priced in. Now, we feel like the market is fairly valued and would expect the next move comes from earnings, as opposed to valuation,” said Moore.
Their highest conviction calls right now are U.S. stocks and emerging markets, with a focus on the “quality earners” in both regions, meaning companies that are being “thoughtful and prudent” about their investment plans and not aggressively increasing capital expenditures. Healthcare and tech are two sectors she likes.
Read: Stocks are poised for an 18% hit, warns economist who nailed last financial crisis
The market
Ahead of the start of a two-day Fed meeting, the Dow YMH9, +0.92% , S&P 500 ESH9, +4.32% and Nasdaq NQH9, +4.72% futures are flat. On Monday, the S&P SPX, +0.37% and Nasdaq COMP, +0.34% ended at their best levels since Oct. 9. The Dow nabbed its fourth-straight win.
The dollar DXY, -0.17% is down, while gold US:GCU8 and crude US:CLU8 is higher.
Europe stocks SXXP, +0.70% are struggling, while Asian equities were weaker across the board.
The chart
Big tech companies have come a long way in over 20 years, which you’ll see in our chart of the day. The chart from u/TheNerdistRedditor (h/t to Visual Capitalist for spotting) shows market cap of dominant companies over the years.
Here’s the setup in 1995, when IBM IBM, +0.56% and Microsoft MSFT, +1.43% dominated:
Fast forward to 2019 and the company roster has mostly changed up a lot:
Here’s the animated version that shows changes through the years. You might have to watch it a few times to really take it. Microsoft, for sure, has hung in there.
The buzz
Canadian regulators say they will re-examine approval of Boeing’s BA, -1.77% grounded 737 Max after reports of the U.S.’s own probe, on the heels of the recent fatal crash of that jet in Ethiopia.
Worth it? Revlon REV, +2.60% stock tumbles after warning of possibly unreliable financial statements when it comes to 2018 reporting.
After proving it can sell recreational pot in Canada, Tilray TLRY, -0.36% plans to broaden out its market.
Nvidia NVDA, -0.51% says Amazon AMZN, +1.74% will now be using its key data-center chips.
Netflix NFLX, +0.55% CEO Reed Hastings says his company won’t be integrating into Apple’s new streaming service.
California Rep. Devin Nunes is suing Twitter TWTR, -0.45% claiming the site “shadow bans” conservatives. He’s also suing two parody accounts, one that purports to be his mom and another his cow, which called him “treasonous cowpoke.”
To recap: Rep. Devin Nunes, the top Republican on the House Intelligence Committee, is suing Twitter because a fake cow was mean to him on the internet. (He's also suing the fake cow.)
— Brad Heath (@bradheath) March 19, 2019
Netflix NFLX, +0.55% CEO Reed Hastings says his company won’t be integrating into Apple’s new streaming service. He also said that the company expects to be blocked in China for a long time.
Michael Sanchez, the brother of Amazon CEO Jeff Bezos’ lover Laura Sanchez, reportedly sold the billionaire’s secrets for $200,000 to the Enquirer’s publisher.
The economy
Factory orders are due later this morning, and a two-day meeting for the Fed’s interest-rate committee begins Tuesday. Don’t look for a change in policy, but we might get some details on the plan to stop shrinking its balance sheet.
Random reads
New Zealand PM Jacinda Ardern says she’ll never speak the name of the terrorist who killed 50 and injured dozens.
Meanwhile, ISIS broke a six-month silence to urge revenge for those New Zealand mosque attacks
Two sugary drinks a day are killers for women
Sesame Street’s desert isle fantasy sparks fierce Twitter debate
Oscar's Debbie Downer act would get tired real quick. Elmo is simply too stupid, would accidentally kill himself somehow with a coconut then I'm alone on the island. Cookie Monster would blow through our food in a day and we'd have to eat bugs for weeks.
Grover's great. Grover. https://t.co/IWfLFn3464
— Ben Collins (@oneunderscore__) March 19, 2019
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