Global equities markets have posted strong gains this year -- and most of the optimism has come from gains that have been seen in the underlying data reports. Key economic metrics like wage growth, unemployment, and consumer spending have all shown relatively stable improvements that do now appear to be vulnerable to declines at this stage. This ultimately suggests that large corporations will continue to post positive earnings surprises that will enable the market to continue trading at these elevated levels. These are all factors that will continue to influence very popular market instruments like the SPDR S&P 500 ETF(SPY, Financial) and other key indicators.
Of course, corporate earnings depend on a number of different things, so it will be critical for companies to maintain strong balance sheets in order to propel the rallies that are currently in place. Corporate performance continues to rely strongly on company reputation and brand recognition, and this is why many companies have been working so hard to develop a range designed to prevent injury and devoting many resources to enhancing the ways customers are viewing their companies and their products/services.
There are many strategies involved when large corporations are defining the proper methods for conducting these practices, and so we should continue to see differences in the ways that these topics are approached based on industry sector. Financials have made many headlines in these areas over the last few months, with a key example being seen in Wells Fargo & Co.(WFC, Financial). The development of several lawsuits has put the company in damage control mode and contrarian investors are wondering if now is the time to start buying the stock at lower levels.
Clearly, companies like WFC will need to enact significant branding and reimaging programs in order to turn market sentiment and push investors back toward to buy side of the market. Of course, this is easier said than done when it comes to redefining the brand identity of a company that is firmly established in its businesses. But, if anything else, this should make it clear to smaller organizations that the issue of branding management will likely be an issue that is more and more important as time goes on.
Looking ahead, we will need to see robust figures in the consumer spending aspects of the markets in order to expect further rallies in the key equities benchmarks. Many would argue that we are currently trading at extreme levels as far as valuations are concerned, and so this will put many investors in a more precarious position as we head into the final months of the year. Most of the market has its attention focused on the businesses that are located within the S&P 500 but it is important to remember that there are other benchmarks that are capable of defining the broader image of the large corporate branding structure.
Because of all this, we could start to see some differences in the ways individual companies in the S&P 500 start to perform at these elevated levels. If you are a conservative investor that is looking to avoid volatility, this will not come as good news. But this may be an argument to start to consider longer-term positioning stances.
