Tuesday's Market Minute: Upside Risk?!

Most of the major indices are 1%-3% below their all-time highs despite headline risks, geopolitical turmoil, and weakening corporate earnings. With negative market sentiment ramping up, why are U.S. markets still near record highs?

One question that most market-watchers and economists have not addressed is a potential for a melt-up for stocks. The upcoming fourth quarter is historically strong and retail sales are projected to rise close to 5% above last year’s levels this holiday shopping season. The consumer continues to carry the U.S. economy and data is showing no slowdown at this point. Low unemployment and rising wages are providing the backdrop for strong holiday sales, which should boost GDP numbers into the end of 2019. The flipside is rising consumer debt but the robust employment situation is pushing back against those fears.

Earnings season begins in a few weeks and should give us some clarity on the corporate side along with expectations on guidance. If the fourth quarter is as good as projected, will stocks continue to rise into the end of the year and recession fears get pushed aside? Time will tell…

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