According to some on Wall Street, the stock market’s monster rally from its Christmas Eve low is hard to explain – or justify – from a fundamental standpoint. The market’s more than 18% comeback coincided with a wave of downward growth and earnings revisions that lowered analysts’ expectations for first-quarter earnings and GDP growth. As Deutsche Bank’s chief international economist Torsten Slok points out, “Either markets have to come down to where growth expectations are, or growth and earnings expectations have to move higher to justify current valuations.” Looking further out, he noted, the Institute for Supply Management’s (ISM) readings and the Purchasing Manager’s Index (PMI) readings are both pointing to more weakness going forward.
Stock Market Rebound
| March 04, 2019