Positive Earnings Season Upcoming, RiverFront CIO Jones Tells Bloomberg TV
NEW YORK (TheStreet) -- The S&P 500 hit all-time record highs on Monday, as U.S. stocks continue to power upward after two years of sideways movement.
CIO Michael Jones of RiverFront Investment Group believes the overall sense in equity markets is one of confidence and that the upcoming earnings season will be a good one.
"The clear evidence is that the U.S. really accelerated in the second quarter," Jones said on Bloomberg TV's "Bloomberg Markets" today. "We left some of the drag from the oil patch behind, we picked up some consumer spending, some wage gains and, most importantly, we accelerated in housing."
Analysts are expecting a reported 5.7% drop in earnings for the upcoming season, which Jones says is "too pessimistic going into this quarter." The technology sector and "the friendlier dollar environment will help" S&P 500 stocks, as well as healthcare and even utilities.
"A lot of things broke right for the U.S. economy in the second quarter," Jones noted.
The global impact on U.S. markets has been a dominantly positive one as well, as Brexit ended up boosting the U.S. financial sector. Jones believes that U.S. interest rates being held down decreases the likelihood of a Federal Reseve rate hike in the future, thus making U.S. stock markets "look more attractive on a relative basis."
Additionally, the British Prime Minister race and the Japanese electorate support of Prime Minister Abe is reassuring for global and U.S. markets. Jones warns that the bank bailout negotiations in Italy are a lingering risk, which will come to a conclusion before Italian bank stress tests are published at the end of July.
"There are still several very important political risks sitting out there for financial markets that we hope and expect ... will get the people in the E.U. to be more accommodative to Italy, [and] not make the mistake they made in Greece," Jones added.