Bruce Bittles from Baird remarked Monday that the equity markets, faced with a weakened technical condition and strong economic headwinds, are expected to remain in a wide trading range of 1350 to 1440 on the S&P 500 in the second quarter. Following the large rally in April, stocks are faced with a number of hurdles including an overbought condition and rising investor optimism, he said, and in addition, the rally since March has failed to produce significant broad market improvement and NYSE and NASDAQ volume is well below levels that would suggest a breakout on the upside.
Investor sentiment continues to move away from the extreme pessimism found at the March lows but optimism is notconsidered extreme, Bittles remarked. Overall, he said, a number of sentiment indicators support the probability of a trading range environment.
He wrote, "The latest economic data suggests that the U.S. economy is beginning to stabilize as a result of the aggressive efforts of the Federal Reserve and the Government's fiscal stimulus package. Weekly unemployment claims fell last week and the Institute of Supply Management (ISM) reported that the service sector expanded last month for the first time in 2008. The March trade numbers showed the deficit narrowed by a significant margin due to a plunge in imports which will allow for a slight upward revision in the GDP statistics."
However, Bittles remarked that this week economic news is expected to show the economy remains in a slow-growth mode.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.