U.S. equities and stock exchange traded funds were stuck in range bound trading despite a rebound in energy shares.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO), were flat Wednesday.
Energy shares were among the biggest winners Wednesday, rising 1.5% in the S&P 500 as oil prices surged. West Texas Intermediate crude oil futures increased 3.6% to $47.5 per barrel after data showed U.S. crude stockpiles declined more than analysts expected last week, according to the Wall Street Journal.
U.S. equities, though, remain near record highs, supported by corporate earnings that exceeded analysts’ expectations and mostly beating estimates with the majority of S&P 500 companies now having reported results.
As the earnings season draws to a close, market observers are turning back to the Trump administration, arguing that the president will need to deliver on proposed changes like tax cuts if the market rally is to continue.
“We have had a very good reporting season, but…we really need the tax cuts” for equity markets to push higher, Monica Defend, head of global asset allocation research at Pioneer Investments, told the WSJ.
The markets were also relatively relaxed in light of the recent political kerfuffle after President Donald Trump fired FBI Director James Comey, which added to concerns between the White House and Congress. Traders tried to assess the firing’s potential impact on Trump’s policy agenda.
“All in all, this does not support the view that the U.S. Trumpflation trade faces an easy road ahead of it,” Michael Every, head of financial markets research at Rabobank Group in Hong Kong, wrote in a note, according to Bloomberg. “It underlines that real surprises can pop up out of the box at any time right now.”
Dealing with replacing Comey takes Congress “further away from getting those changes” the stock market is looking for, importantly tax reforms, Jeff Zipper, managing director of investments at U.S. Bank’s Private Client Reserve in Palm Beach, told Reuters.
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