Alec Young, equity market strategist for Standard & Poor’s, told CNBC’s “Closing Bell” that beating low expectations moves the market higher.
“We think the momentum in the market is looking really good,” Young said. “We know earnings growth is slowing a little bit from the pace of the last few years, but nevertheless the market was priced for 3% earnings growth this quarter. We’re coming in at double that rate.”
Many analysts overestimated how much the economy would slow, making positive economic news rocket fuel to propel the market higher.
“The market definitely priced in one big theme earlier in the year, and that was a slowing economy,” Young said. “So today’s news on durable goods coming in well ahead of expectations was a positive surprise. But even when we get bad news on the housing front like we did (Tuesday), the market is able to look through it.”
Young likes healthcare and financials, especially investment banking and brokerage stocks.