S&P 500 and Nasdaq close at record highs as oil prices drop

Summary

Lori Calvasina from RBC discusses the S&P 500 and Nasdaq closing at record highs amid falling oil prices. She argues the market is not overheated, citing AI earnings as a buffer and reasonable valuations. She notes her existing underweight in consumer discretionary and sees limited appeal in defensive sectors.

• S&P 500 and Nasdaq hit record highs while oil prices dropped.
• Lori Calvasina says the market is climbing a wall of worry, not overheated.
• AI-related earnings are providing a buffer for S&P 500 EPS.
• Market-cap weighted PE is around 25x, below last year's 28x peak.
• Russell 2000 PE at 16.6x has room to 18x based on past highs.
• She has been underweight consumer discretionary before the war.
• Defensive sectors like utilities and healthcare face challenges.
• Investors are cranky but not recession-focused.