Post-election market exuberance saw the S&P 500 price index shoot up 13.5%, to just below its record high as of June 7, but most of that happened before March. The market is up just 2.8% since the end of February.

Some of the gains can be explained by the global economic recovery. Indeed firms with more than 50% of sales outside of the US reported 20.9% growth, versus companies with more than half of sales inside the US, which reported 9.9%, as of mid-May.

But, as Sara Potter writes for FactSet, the economic expectations do not match reality, and until the Trump administration makes more significant progress on his policy agenda, the high hopes will be just that:

Short-term economic indicators didn’t see the big post-election peaks that surveys of sentiment captured:

  • Commercial and industrial loans by US commercial banks have remained flat for the past seven months, on pace to post the smallest annual increase since 2010, and compared to a US$143 billion increase in 2016
  • Hiring has stalled over the last three months with job gains averaging 162,000 over the last three months, despite starting off the year strong with 216,000 nonfarm payroll jobs added in January and 232,000 in February
  • Nondefense capgoods ex-aircraft orders have remained flat over the past three months, after a year-on-year increase of 3.0% in April

Sentiment slipping:

  • The ISM manufacturing purchasing managers index (PMI) has fallen to 54.9, after surging to a two-and-a-half year high of 57.7 in February up from 52.0 in October
  • Non-manufacturing PMI has dropped to 56.9, after jumping from a pre-election mark of 54.6 to 57.6 in February
  • NFIB Small Business Optimism Index surged to a 14-year high of 105.9 in January, but fell back to 104.5 as of April
  • Conference Board’s measure of consumer confidence slipped slightly in April and May to 117.9 at the latest reading, after the index saw a post-election surge from 100.8 in October 2016 to 124.9 in March, a post-financial crisis high