“We have a ways to go on the cyclical recovery here,” Levine, head of equities at the firm, said on Bloomberg TV and Radio. The U.S. has exhibited “an exceptionalism in the amount of fiscal policy, the amount of monetary stimulus and also in the way we vaccinated the population. And because of that I actually am very bullish,” she added.

For Bill Callahan, an investment strategist at Schroders, “equities just make sense right now,” and dip buyers will be rewarded as the market continues to grind higher.

On the economic front, data showed U.S. housing starts increased in June by more than forecast, suggesting residential construction is stabilizing despite lingering supply-chain constraints and labor shortages.

Eoin Treacy's view

The compression in yields makes the argument for investing equities more compelling because it reduces speculation that monetary accommodation is about to be removed.

The hallmark of the stock market rally this year has been the inability of volatility spikes to last more than a day or two. The volatility of volatility measure (VVIX) has been ranging above 100 since 2020 whereas prior to the pandemic is mostly ranged below that level. A falling wedge pattern that suggests this pattern will not last indefinitely but it is certainly still evident today.

Strong rebounds by Apple and Amazon from the upper side of their respective trading ranges today helped to fortify investor sentiment.

The strong performance of stay-at-home champions like DocuSign, Peloton was accompanied by even better bounces by recovery candidates like cruise providers and airlines. That suggests a broad-based rebound which is a lot more influenced by anticipation that liquidity will remain abundant than the Delta variant red herring.

With renewed stock market enthusiasm, the flip side is there will likely be less demand for bonds which should allow for a fresh bounce in yields over the short term.