Yahoo Finance U.S. economy is in better shape than people give it credit for: strategist
The market is flirting with record highs, the U.S. and China appear to be working toward a trade deal, and June’s job report released on Friday blew away expectations.
While headwinds certainly exist, the U.S. economy is in better shape than people give it credit for — and the backdrop for the market looks positive, according to LPL Financial’s Senior Market Strategist Ryan Detrick.
Detrick argued that the market is poised to continue its upward trajectory, both from fundamental and technical standpoints. “All this news about China and the global slowdown, which is real, are concerns which could add to volatility after 17%-18% year-to-date gains so far for the S&P, but the underlying pinnings of this economy that have gotten us here,” Detrick said on Yahoo Finance’s YFi AM. “This earnings season, which is going to start up here in another week or two, will justify most of this move we’ve seen this year.”
Prior to June’s jobs report, some economists were predicting a 50 to 75 basis point rate cut at the July Federal Open Market Committee meeting. However, the strong print threw a bit of cold water on those predictions, according to Detrick. “Look at what happened today with the solid jobs number. It probably put a stake in the heart of the 50 basis point crowd,” he said.
While the labor market remains strong, other economic data has been pointing to a slowdown in the U.S. economy. “That’s why it makes sense to probably have just a 25 basis point cut in July, then the Fed will kind of take a look to see where things are, specifically with trade,” Detrick explained.
Markets may be at record highs, but there is still opportunity in the market, according to Detrick. He pointed to emerging markets and value stocks over growth stocks. “Those are the places where we’re looking to invest as we see a U.S. stock market that is fairly valued. But there’s always good values, and those are the two areas we’re looking at,” he said.
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Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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