After a volatile few weeks, stocks are on the rebound.
The S&P 500 is now up a tiny 0.6% for the year, but at least it’s up.
Last week, the S&P 500 scored its fourth straight weekly gain and the benchmark stock index is now up 11% from the depths of its most recent plunge in August.
Oppenheimer strategist John Stoltzfus in his weekly note to clients on Monday looked at a few things that have been giving bears — or investors betting that stock prices will fall — fits in the last few weeks.
“From our perspective, what has generated renewed vigour in the bull market this year has been yet another round of positive fundamentals that have served this Bull Market well in overwhelming negative factors since March of 2009,” Stoltzfus writes.
“The current set of positive fundamentals underscores an economic and market landscape prone to deliver progress if not perfection.”
Stoltzfus’ “positive fundamentals” are underscored by eight major things giving bears trouble right now:
- Central banks around the world have accommodative monetary policy.
- China is doubling down on its stimulus program; it cut interest rates last week for the sixth time in a year.
- The European Central Bank and the Bank of Japan have recently renewed their commitments to continue with quantitative easing.
- The Federal Reserve under Janet Yellen has had a degree of transparency inspired by her predecessor, Ben Bernanke, and not really seen prior to that.
- Earnings continue to beat expectations even in a tough environment.
- Revenues are also topping forecasts.
- There are persistent signs that the economic recovery is sustainable.
- The geo-political climate in Europe, and even in Japan, is improving.
Stoltzfus added that, “all of the above which have served to frustrate bears once again and empowered bulls for yet another market rebound.”
Stoltzfus’ year-end target for the S&P 500 is 2,311.
The index would need to rally 12% from Monday’s opening level of 2,065.
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