Stocks Up As Markets Extend Their Gains  Image: Bigstock Stocks closed higher yesterday, extending the rally that began in mid-June. The Nasdaq and the small-cap Russell 2000 have both exited their bear market (as of last week), and have begun a new bull market. (While the S&P hasn't crossed that threshold yet, they are not that far behind.) I'm reminded of the comparison that was made between the first half of this year, and the first half of 1970. This year's first half performance (down nearly -21%), was strikingly similar to that of 1970 (also down -21%). And in both periods, high inflation was an issue. What's interesting is that the second half of 1970 saw the S&P up 27%.
Of course, that doesn't mean that's how it'll go for the back half of this year. But it doesn't mean it won't either. And so far, it sure seems to be heading in that direction. Strong aggregate demand, a robust jobs market, better than expected earnings, and finally signs that inflation may have peaked, has led to a strong rebound. And with expectations for full-year GDP to come in at 1.7% (that means the end of the recession with growth back on the horizon), it's no wonder stocks are soaring. But not every economic report has been glowing. Yesterday's Housing Market Index ticked down to 49 vs. last month's 55 and views for the same. And the Empire State Manufacturing Index also declined, dropping to -31.3 vs. last month's 11.1 and the consensus for 5.0. (This was the second largest monthly decline in this report's history.) Today we'll get another look at the economy with the Housing Starts and Permits report, and Industrial Production. And more earnings with another 148 companies set to report today (443 total thru the rest of the week). See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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