“A very big part of it is the pace of changing news coming out of Washington is very unsettling,” Lutts said. “This is something investors are very uncomfortable with. You would think they would start to adapt to it, but one minute we’re going in this direction and the next we’re changing.”
Investors would be wise to dismiss the noise and focus on corporate fundamentals, said Michael Kresh, president of Creative Wealth Management.
“The overhang of daily political tensions and nonsense coming out of the White House is causing people to become more nervous, but that doesn’t change the fundamentals of the market,” Kresh said. “We’re still coming in above [earnings] expectations. So the issue here is if we subtract the noise, which is noisier this year than we’ve been exposed to, we have to look at what’s actually happening.”
“If we come in at the end of the year with a net 8 percent return, everybody should be ecstatic,” he added.
The math seems to make sense: Earnings are expected to rise 17.1 percent in the first quarter and 18.4 percent for the full year. Mid-to-high single-digit gains don’t seem unreasonable in such an environment.
Yet the bar has been set so high that it will be a challenge to impress.
“If we get through a week or two without jitter-inducing headlines … the market may just be ale to take a deep breath and climb higher,” said Quincy Krosby, chief market strategist at Prudential Financial. “It’s very interesting to see this market struggle. You may not want to go in long over the weekend.”