MarketWatch: “Why earnings growth, not the Fed’s interest-rate policy, is driving U.S. stocks”
By datatrekresearch in IN THE NEWS
Excerpt from MarketWatch quoting DataTrek co-founder Nick Colas:
.... "Corporate earnings growth matters more to stock prices than the Federal Reserve’s interest-rate policy over the longer run, Nicholas Colas, co-founder of DataTrek Research, said Monday in a client note.
U.S. stocks have “entirely” ignored structurally higher Fed-funds rates since 2019 and moved almost exactly in line with corporate earnings power, said Colas. The yield on the 2-year Treasury note a proxy for the market’s expectations of the central bank’s future monetary policy, has risen to 4.747% on Monday from around 1.6% at the end of 2019, while the S&P 500 index has advanced 58% over the same period with its earnings up 46%, according to data compiled by DataTrek.
“Higher long-term rates have not hurt equity valuations one bit,” Colas said, adding that even if the Fed does not start cutting interest rates this year, a stronger-than-expected U.S. economy can still deliver earnings growth and high stock prices"....
Full article here on MarketWatch.
