Over the past two weeks, 79.9% (as of 4/2/2018) of companies that have reported first-quarter results have reported quarterly earnings and earnings per share (EPS) higher than analysts’ anticipated. Yet still, the markets are down this week. This may seem strange, but it’s not unheard of. Could too much of a good thing actually be bad for the markets?
Too much of a good thing?
Quarterly earnings reports provide insight into how stocks may be valued in the future. When earning results exceed market expectations, stock market prices tend to rise. So why don’t strong results always boost the markets?
Historically, years with unexpectedly high-profit growth have often resulted in a market downturn. Sounds counterintuitive, but this may result from expectations getting so high that even strong market performance can’t keep up. Many investors have concerns that strong earnings may suggest the economy is overheating, meaning productivity is unable to keep pace with growing demand.
Be prepared for all market conditions
Don’t sweat it. Although some fear overheating, your MoneyLion Plus investment approach was designed for all market conditions. Our accounts are broadly diversified and constructed to help withstand market volatility. Staying focused on your long-term goals is our recommendation for a successful approach to investing.
As we have previously discussed, investments are meant for your future: think retirement or your children’s education. If you withdraw your investment when the market is down, you may miss out on gains when it goes back up. That’s why your Plus membership includes access to a 5.99% APR loan when you need it -- so you can tackle expenses while keeping your investments untouched.
In other market news
Inflation | mobile continues to be a hot topic this week. In a statement released Wednesday, the Federal Open Market Committee (FOMC) announced that it’s leaving interest rates unchanged. Inflation is now expected to run closer to its 2% target in the coming months.
The FOMC also suggested that the Fed will raise its benchmark rate four times in 2018, instead of the three previously planned. The next policy meeting is set for June, where experts say there is a 94% probability the Fed will hike interest rates.
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MoneyLion Plus investment account: * Not FDIC Insured or Bank Guaranteed * May Lose Value. The guided investment account is subject to risks, including but not limited to the loss of principal. Not bank or FDIC insured. This advertisement should not be construed as a recommendation regarding the suitability of purchasing a particular security or securities in general.