[ad_1]
Despite all these concerns and the negative headlines, stocks are still holding up pretty well. The market tumbled in August, but equities rose sharply in September.
The bull market is a bit long in the tooth. This has been going on for over 10 years, with only a few corrections made over the past decade to calm the game.
Experts say the market could continue to grow. And if you have a long-term goal like retirement, this is definitely not the time to panic and bail out stocks. That said, some businesses and sectors may be doing better than others in the foreseeable future.
Blue Chips exhibited abroad may have trouble
According to FactSet data, more domestic-oriented companies should continue to perform well despite geopolitical unrest.
Voters in the S & P 500, with more than half of the revenue coming from the United States, are expected to see a slight increase in third-quarter profits compared to last year.
Commercial conflict weighs on profits in a number of ways, said John Lynch, chief investment strategist at LPL Financial, in a report.
"Slowing economic growth is hurting revenue, while paying tariffs and managing supply chain disruptions are negatively impacting profit margins," Lynch said. "The economic uncertainty surrounding future commercial actions weighs on capital investments, which limits the opportunities for companies to increase their revenues, especially industrial and technology companies."
US small businesses, as well as telecommunications, utility and real estate companies, whose dividends are higher than those that investors can get from government bonds, could continue to thrive. .
"Several macroeconomic factors fueled the strong outperformance of defensive stocks relative to their cyclical peers," said Alec Young, general manager of global market research at FTSE Russell.
According to Young, the main factor in favor of defensive stocks has been "widespread fears of a slowdown in global growth, which have been exacerbated only by seemingly endless trade tensions between the United States and the United States. China".
"This has led companies in the defensive and countercyclical sectors to manage more economically sensitive stocks," said Young.
The Fed again to the rescue?
This puts the Federal Reserve in the position of having to act.
Traders are currently expecting a 90 percent chance of a quarter point cut at the Fed's next meeting on Sept. 18 and an additional 25 basis point cut when the Fed meets at again on October 30, according to the futures contracts followed by the CME group. This would leave the federal funds rate in a range of 1.5% to 1.75%. Trump called for zero or even negative rates.
We do not know if the Fed will want to be so aggressive. But further rate cuts – from the Fed, the European Central Bank and other global central banks – seem very likely.
"Our story remains that the global economy is slowing down, with the manufacturing industry bearing the brunt, while trade conflicts add to the volatility of financial markets and central banks are aggressively acting to offset the economic slowdown. said Bill Stone, chief investment officer at Avalon Investment & Advisory, in a report this week.
But that does not have to be like that. The Fed would probably not need to lower its rates further if the United States and China had understood tariffs and ended the trade war.
Julian Emanuel, chief strategist for stocks and derivatives at BTIG, said in a report that the S & P 500 index is expected to rise to 3,250 by the end of the year – a gain of nearly 9% from current levels – but only if the United States and China makes good.
Emanuel said that if the US and China "build a truce on the economic cold war," it would probably boost business and consumer confidence, which is "critical to the health of the economy and the world." markets. "
"A US / China deal could be the biggest surprise of all," said Emanuel.
[ad_2]
Source link