US economic data yesterday were mostly negative. Bloomberg reports:
Manufacturing in the U.S. shrank for a third month and rising prices eroded consumers' buying power as the six-year economic expansion ground to a halt.
The factory index compiled by the Tempe, Arizona-based Institute for Supply Management was unchanged at 48.6 in April. The Commerce Department said consumer spending rose 0.4 percent in March. Stripping out the effect of inflation, purchases were up 0.1 percent after stagnating the previous month...
The Labor Department reported separately that first-time claims for unemployment insurance rose more than forecast last week, to 380,000. The total number of Americans receiving benefits climbed to 3.019 million, the highest level since April 2004.
The Commerce Department also reported today that spending on U.S. construction projects fell 1.1 percent in March as homebuilding posted the biggest one-month drop on record.
Nevertheless, market sentiment has turned positive. From MarketWatch:
U.S. stocks on Thursday soared higher, propelling the Dow to its first close above the 13,000 mark in four months, as investors offered a delayed but warm reception to a likely pause in the Federal Reserve's recent string of rate cuts.
And you thought that investors preferred more rate cuts.
But maybe more rate cuts are not needed for investors to turn bullish. Bill Luby at Vix and More says that the current yield curve is already "almost identical to the yield curve as it stood on May 2003", which turned out to be "the beginning of the five year bull market".