Money

Bulls Hosting Cinco de Mayo Party

With just over 400 of the 500 companies that make up the S&P 500 having reported first-quarter earnings, the case for the bull market extending its run is rock solid.

Corporate profits are up by 9.05% and rising, with a logical case for 20% gains for 2017 if tax reform is passed in or near its current form. What is most encouraging is that in light of the five tech pillars Microsoft Corporation (<a href=”https://www.dividendinvestor.com/dividend-quote-new/?txtSymbol=MSFT”>NASDAQ:MSFT</a>), Apple Inc. (<a href=”https://www.dividendinvestor.com/dividend-quote-new/?txtSymbol=AAPL”>NASDAQ:AAPL</a>), Alphabet Inc. (<a href=”https://www.dividendinvestor.com/dividend-quote-new/?txtSymbol=GOOGL”>NASDAQ:GOOGL</a>), Facebook Inc. (<a href=”https://www.dividendinvestor.com/dividend-quote-new/?txtSymbol=FB”>NASDAQ:FB</a>) and Amazon.com Inc. (<a href=”https://www.dividendinvestor.com/dividend-quote-new/?txtSymbol=AMZN”>NASDAQ:AMZN</a>) getting so much attention as they comprise 13% of the S&amp;P, it is other market sectors that are rising on strengthening earnings.

Those other sectors are making a deep impression on fund managers and investors alike. With the exception of the energy and retail sectors, it’s a broad rally that has room to run.

The correction in energy is not isolated. Prices in soft commodities like grains, fertilizer, sugar and other foodstuffs are in decline. Base metals like copper and iron are seeing price erosion, as are precious metals since investors are under the influence that core inflation is going to go very low for longer. Reduced pricing for precious metals provides a counter-lever to inflationary pressures in the services sectors of the broader economy. At the same time, low prices for raw materials is positive for American manufacturers, since a strong dollar buys greater amounts of inputs needed to produce finished goods.

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