In May the market calmed a bit from the large moves we have seen for most of this year. The market has moved up one percent or more 21 trading days and down 15 so far in 2018. That is 36 days when the average of the S&P 500 is 53 days per year. 2018 should easily exceed that number. As a reminder, 2017 had only eight days with 1% or more. So obviously 2017 was the calm before the storm in 2018.
Now what? It appears that Wall Street has already built in the tax cut, the great earnings in the first quarter and the next, as well as the very good economy and more Federal Reserve rate increases. Thus the market, at least in the short term will be driven by the unpredictable political drama out of Washington.
Expect more volatility, it’s going to be a bumpy ride through the summer and into the fall. Maybe near or after the elections we will see a return to what really matters in corporate America and that is sales and earnings.