So here we are again.
Since stumbling last month, when a string of unfriendly numbers on inflation arrived undercutting hopes that the Fed could soon deliver sweet, sweet rate cuts, the equity markets have rallied hard putting us within spitting distance of new highs for the year.
What accounts for snapback? As near as we can figure, it’s a salubrious combination of strong earnings numbers — resulting in analysts ratcheting expectations higher for profits over the coming year — and what the market interpreted as reassuring sounds from Federal Reserve, which left rates unchanged on May 1. The market also likes recent signs of some slowing in the economy that could pave the way for the Fed to cut rates.
