The S&P 500 index pushed its high watermark even higher on Friday, as a better than expected U.S. jobs report spurred buying interest that led the index further into record-setting territory. In fact, even seemingly negative developments at home and abroad disappointing GDP reports, stagnant or falling year-over-year earnings, attempted coups, and signs of trouble in China were met with little more than a shrug from investors in what has become a wall of worry that traders are evidently eager to climb.Most companies having reported earnings for the second quarter of 2016, there have been more “beats” than “misses” when compared to expectations. However, that’s not exactly the whole story.According to S&P Capital IQ, annualized earnings growth for the benchmark index is on track to register negative year-over-year earnings growth for the fourth quarter in a row. Still the market marched higher as many companies’ results were not as bad as feared.Caterpillar, with manufacturing facilities in Clayton and Sanford, N.C. and thousands of employees in the state, was not one of those companies.The heavy machinery giant, often serving as a barometer for industrial activity, reported 16 percent declines in sales versus the same period last year, saying in its release that, “World economic growth remains subdued and is not sufficient to drive improvement in most of the industries and markets we serve.”Recent investor trends have placed less importance on company earnings than the supportive actions of central banks, and the dog days of summer have produced plenty of monetary policy to strengthen the easy money foundation under construction since late 2008.The Federal Reserve kept primary interest rates the same. The Bank of Japan doubled its ETF purchase program, while the Bank of England cut rates to 0.25 percent and increased planned purchases of government and corporate bonds over Brexit-related economic concerns.U.S. GDP reports were lackluster, bringing annualized growth for the first half of 2016 to a tepid 1 percent. Oil has also faced recent pressure, briefly dipping below $40 a barrel as it dipped more than 20 percent from early June highs before retracing some of the extended losses by week’s end.Still, the July employment report released on Friday morning yielded an estimated 255,000 new jobs versus an expected 185,000 and gave the eternally optimistic market some logical reasons to cheer.However, such strong numbers and lofty markets also raise the specter of a 2016 Fed rate hike that could cut the party short when many traders return from summer vacations in the coming weeks.
