The S&P 500 dropped more than 10 percent from its 52-week intraday high, into correction territory, last August and early this year on concerns of negative spillover from a slowdown in China’s economy. After the surprise U.K. vote to leave the European Union on June 23, the S&P declined more than 5.5 percent over the next two days, but more than recovered those losses in the two weeks since.
It’s a “very unique kind of dynamic,” Deming said. “As interest rates continue to get pushed lower … it just continues to force assets into what are perceived as higher-risk areas.”
“You’ve got that buying pressure to support,” he said. “The market still doesn’t know the true economic impact of what happened in Europe.”
On Monday, global stock indexes rallied following national elections in Japan that will keep pro-stimulus Prime Minister Shinzo Abe in power. Other tailwinds included an emerging clearer picture of the United Kingdom’s post-Brexit leadership muddle and the strong June U.S. jobs figure released Friday. Treasury yields edged higher Monday, but the long end remained near recent record lows. Gold was little changed.
The S&P 500 also could be pushed higher — or lower — as earnings season picks up, with major financial firms reporting later this week and tech names in the next two weeks.
Katie Stockton, chief technical strategist at BTIG, said in a note that the S&P 500 has risen above the psychologically key 2,100 level 25 times in history and has not stayed above that level for more than 14 straight trading days.
“We find this concerning, with sentiment overly complacent by some measures,” she said, adding she is waiting for consecutive Friday closes above the prior record to determine a “decisive breakout.”
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