US Stocks Ignore GDP News

By Chris Lowe, Editor-at-Large on June 2, 2014

The US economy may have shrank in the first quarter, but investors don’t care.

The S&P 500 is trading at a new all-time high. And the Dow Transports – made up of railroads, airlines, trucking, shipping, delivery services and logistics companies – have rallied 10% year to date (and 5% since May 15).

Even the more growth-oriented indexes are once again in bullish mode…

For example, the Nasdaq Internet Index fell 21% from its peak in early March. But over the last three weeks it’s up over 10%.

Same goes for the Nasdaq Biotech Index. It plunged 24% from its February peak to its April 14 low. But it’s up 15.5% since then.

You’ll recall that we were puzzled by the divergence between the small-cap Russell 2000 Index and the S&P 500.


The small-cap index fell 10% from early March through to late April. But it’s up 5% since then… and the battle is now for the 50-day moving average (highlighted in yellow on the chart above).

The Fed may still have the US economy on life-support… GDP may have collapsed in the first three months of the year… but money continues to flow into US stocks.

For now, at least…

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