The US stock markets have continued their strong surges ahead in recent months, although some fund ma...
Robert Siddles, head of US equities at Gartmore, says that the most striking thing about the US markets is that they hit such record highs in the past few months.
He comments: "There are several factors behind this. Firstly, the Fed's decision to raise interest rates by only 25 basis points has had a positive psychological impact. It has sparked renewed confidence in technicals and in some growth sectors.
"While the outlook is optimistic, it may be that investors have become over-optimistic. As is often the case, the markets may experience an attack of reality in the wake of the Fed's move and we could be in for another fall.
"Over the past few months we have been moving in and out of tech stocks and most recently have moved quite heavily into smaller tech stocks."
Katherine Garrett-Cox, head of the US desk at Hill Samuel Asset Management, says: "At the moment the market is fairly valued. A lot of the movements are dependent on momentum and the key over the last two months has been a relative pick-up in Japan. There are two key issues at the heart of US equities - the direction of interest rates and the extent to which earnings accelerate.
"Over the last two months we have shifted downwards on the market cap scale, reducing our exposure to the bigger stocks in the index. We have also shifted away from growth stocks and more towards a value bias as a better earnings figure is now discernible in the US. We are underweight healthcare and overweight techs, particularly telephone companies."
Simon McCann, US fund manager at Tilney, says: "The economic environment continues to be healthy for US corporations - inflation is under control and we have continued to see considerable productivity gains over the past few months. In terms of asset allocation, we are overweight tech stocks and underweight most Nasdaq stocks."
In June, US retail sales were 7.4% higher than they were 12 months before as shoppers splurged on summer fashions at department stores, according to industry figures.
Federated Department Stores, operator of the Macy and Bloomingdale chains, said sales at its stores open at least a year were 8.4% higher, ahead of analysts' estimates of a 7% gain. Sales showed a 6.5% gain at Wal-Mart Stores, the nation's biggest retailer.
Ames Department Stores, whose sales were 14% higher, cited sales of air conditioners, fans and patio items. Sears, Roebuck & Co noted double-digit sales gains in air conditioners and teen clothing retailer Gadzooks said demand for swimsuits drove its 11% gain. Same-store sales are a key gauge of a retailer's business because they do not include sales from new and closed stores.
In a separate report, Labour Department figures showed initial claims for state unemployment benefits unexpectedly fell by 6,000 in the first week of July to a seasonally adjusted 294,000 - the third consecutive decline and the lowest since the week ended 27 March.
Consumer prices rose 2.1% in the year ending in May, still a low rate when considering they increased an average 3% in the entire decade.
In the first quarter, consumer spending advanced at the fastest pace since 1988, much of that financed through an increase in household borrowing. In April, American Express, the world's biggest charge card issuer, reported that its first-quarter earnings rose 11% as consumers spent more on their cards.
The New York-based company said net income rose to $575m, or $1.26 a share, from the profits of operations worth $520m in the year earlier period, topping analysts' expectations. Credit card loans, led by the Optima card, rose 18% that quarter, according to the company.
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