JJPFF - Don't Sell In May And Go Away: Why Stocks Have Room To Run
2024-05-22 12:30:00 ET
Summary
- Recent data indicates the US economy has been cooling modestly and disinflationary progress has resumed, which should help hasten the start of rate cuts.
- There is a significant amount of cash that is likely to start moving to stock and bonds once the start of rate cuts appears imminent.
- We needed to see a solid earnings season in the first quarter in order to provide a foundation for stocks to move higher. By and large, we got that.
Investors may be tempted to reduce exposure to equities right now. After all, major stock indices around the world, from the STOXX Europe 600 to the Dow Jones Industrial Average, have hit record highs in the last several weeks. And then there is the old adage “Sell in May and go away,” which suggests that investors should dump stocks during the summer and reinvest in the fall.
I’m not a fan of seasonal investment strategies, and I don’t believe new market highs should necessarily be feared. Here are six reasons why I’m confident that stocks can move higher from here.
1. More signs suggest US disinflation is re-accelerating
In last week’s blog , I wrote that the most important data release last week would be the US Consumer Price Index (CPI) data for April. That’s because US disinflationary progress appeared to have stalled in the first quarter....
Don't Sell In May And Go Away: Why Stocks Have Room To Run