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#MoneyBeat U.S. Stocks Show Persistence of Goldilocks Economy

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The U.S. is once again on top.

Major stateside stock benchmarks are pacing for a better annual performance than much of the rest of the world, despite a volatile few weeks. The S&P 500 is up 4.1% so far this year.

By contrast, the MSCI ACWI ex-USA Index, which tracks non-U.S. companies across developed and emerging markets, has risen just 1.2%. The Nikkei 225 is down 4.1% through Monday, while the Shanghai Composite is up just 0.6%. The Stoxx Europe 600 is down 2.6%, and the FTSE 100 has slumped 6.2%.

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It’s still early in a year that has already provided many surprises, so the relative performances could, of course, flip. But if the U.S. manages to finish 2018 on top, it would mark a return to the order that’s characterized much of the post-crisis period, as The Wall Street Journal’s Morning MoneyBeat newsletter noted on Tuesday. Last year, the MSCI index climbed 24%, topping the S&P 500′s 19% rise for the first time since 2012.

In 2017, investors piled into international equities, making bets on resurgent growth. But for all the signs that the global economy has been emerging from a period of sluggish expansion, the U.S. still appears to be a top choice among investors. That’s due in part to a not-too-hot, not-too-cold expansion that boosted corporate profits while containing fears about runaway inflation.

“Extraordinarily strong earnings momentum, corporate tax cuts and fiscal stimulus underpin our positive view” on U.S. stocks, said Richard Turnill, BlackRock’s global chief investment strategist in a market commentary on Monday.

Consumer price index data for February, which measures what Americans pay for everything from shampoo to hotel stays, helped bolster the Goldilocks view in the U.S. economy. Stock futures climbed after the U.S. inflation gauge showed prices climbed 0.2% from the previous month, a deceleration from January’s 0.5% reading.

To be sure, investors have grown concerned about high valuations of U.S. stocks after nine years of a bull market run. But recent volatility, which pushed major indexes to their first 10% drop in two years, helped alleviate concerns that prices were rising too fast relative to earnings.

For now, it seems the U.S. stock market is the one to beat.

To receive our Morning MoneyBeat newsletter via email, click here.

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