Here’s a roundabout way that government dysfunction is lifting stocks
Published: Aug 2, 2017 10:52 a.m. ET
RYAN
VLASTELICA
MARKETS REPORTER
The second-quarter earnings season has largely come in much better than expected for U.S. stocks. But while investors may be viewing that as a sign the economy is firing on all cylinders, some of the move is due to the U.S. government doing quite the opposite.
Weakness in the U.S. dollar—a byproduct of gridlock in Washington, which has stalled hoped-for progress on legislation like tax reform—has been a major contributor to improved results in the quarter, particularly for the technology sector, which has been leading broader stock-market gains this year.
According to Goldman Sachs, “dollar weakness contributed to a 14% rise in earnings per share during [the first quarter], the highest pace of growth since 2011.” The second-quarter reporting season is still ongoing, but whereas the U.S. dollar index fell 1.6% over the first quarter, it dropped 4.9% over the second, suggesting the earnings boost could be larger.
Link to post: Here’s a roundabout way that government dysfunction is lifting stocks - MarketWatch
