Chris Harkins, senior vice-president and managing director at Delta Trust Investments, says there are solid fundamentals in the financial markets that are propelling new- and near- record highs in the benchmark indices.
“It’s explainable,” Harkins said. “I get very nervous when I can’t explain why the market is moving – up or down.”
Appearing on the latest edition of Talk Business Arkansas, Harkins said that a variety of positive economic news has fueled the new levels for the Dow Jones Industrial Average and the S&P 500. He cited strong earnings, worker productivity, a housing comeback, and good jobs numbers among the positives.
“There’s a combination of good things happening,” said Harkins. “I think investors are looking beyond the day-to-day stuff. They’re looking out 6, 12, 18 months and they like the trend.”
He added that quantitative easing (QE3) is helping business and investor confidence. QE3 involves roughly $85 billion in mortgage-backed securities being bought each month by the Federal Reserve Bank to stabilize housing markets and keep interest rates and inflation under control.
“It’s had a profound influence. I think we’ll be debating it for a long time,” Harkins said. “There’s a tall price here, and it seems to be working.”
Harkins warns that sluggish consumer spending still has investors cautious about the future, but the sequester doomsday scenario did not seem to impact investor confidence.
“Our skin has become thicker and I think, unfortunately, investors are used to this dysfunction or inactivity out of D.C.,” he said.
On a final note, despite new records for the benchmark stock indices, Harkins said the average investor shouldn’t pay too much attention to those thresholds.
“At the end of the day, people will go home and look at their own investments. There may be a disconnection, for better or for worse, between what they own and how their portfolio is performing versus what’s being reported,” he said.
You can watch his full interview in the video below.