Tariff Language Eases, Helping Breadth To Improve

Softening of tariff news and increased breadth helped equities rally last week.

So far, 36% of S&P 500 companies have reported first quarter earnings and 73% reported earnings above estimates, while 64% have reported revenue above estimates. The market achieved two important breadth indicators last week—the Zweig Breadth Thrust and 70% advancers breadth. These two indicators have historically led to better returns over the following 6 and 12 month time frames. In addition, credit spreads have narrowed, which could spell lower risk and volatility moving forward.

Meanwhile, the consumer remains resilient as Redbook Sales continue to trend well above average.

Economic indicators leading up to the first print of GDP for the 1st quarter are trending in the right direction for positive growth. Durable goods orders also point to expected increase in consumer spending. Over the weekend, China appeared to exempt some U.S. made products from tariffs and the White House is indicating several trade deals are nearing conclusion. Short-term choppy trading is likely to continue.

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