scottgrannis.blogspot.com). I reckon that this was an overreaction and creates a new buying opportunity on the stock markets - a present from the bears.
The Q1 earnings seasons shows that company profits grew solidly even in a sluggish economy, one result of the rising efficiency of corporations. Falling stock prices and rising company profits translate into shrinking stock valuations, meaning that stocks got cheaper. And the global economy is still growing. Even the April U.S. jobs number weren`t so bad, because the job numbers from the prior months were revised significantly higher.
And the investors got another valuable gift from the bears: The pessimistic sentiment on the financial markets sent oil prices sharply lower. On Friday the oil future (WTI) fell 3.9% and closed below the psychological important $100 mark (bloomberg). Since late February, when oil reached $110, energy prices are under pressure. Cheaper oil is a relief for the economy because consumers have now more money to spend for other goods, which will fuel consumer spending in the coming months and power the economic upswing.
I still believe that the stock market will continue its rally and the S&P 500 will reach 1.700 by end of the year.