The bull market for stocks, which began in March 2009, should persist for at least another year. That is the belief of most financial market professionals involved in the latest surveys.
Here are some other opinions and predictions:
- Growth stocks will be favored by value actions.
- It is believed that international and US stocks have fairly similar prospects in the next 12 months.
- Many believe that the Federal Reserve will elevate interest rates in June, while a smaller number believe the central bank will linger till a later time.
- The yield on the 10-year Treasury bond is lower than expected, at just over 2{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616}.
- There are high concerns about another drop in the market.
The Details
Positive but Modest Returns
As the year 2016 began, the stock market was on a downward slide. But key averages have stabilized since then and have moved higher. On an average, there is a 12-month forecast for the Standard & Poor’s 500 Index (S & P 500), in 2049. The median, or half, is higher at 2125, which translates into a gain of 4{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} from the period in which the survey was conducted.
Sam Stovall, a US strategist at S & P Global Market Intelligence, says: “The continued erosion of the 2016 (earnings per share) projections, in addition to rising inflation, represent potential barriers to action.”
Keep Your Belt Attached
Even if the path to stocks is on higher ground, experts suggest that there could be more volatility ahead. Almost half of them, or 46{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616}, said that they had not seen this year’s low for the S & P 500. Of these, a 12{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} to 31{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} drop was predicted. The benchmark index was set at 2040 when the survey was completed. However, it must be kept in mind that 54{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} of panelists say that the S & P downturn for the year has already been seen.
Bear Market Ahead?
The average came down from 44{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} to 40{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} when inquired about the chances of a bear market in stocks for the coming year or so. That is a 4{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} decrease from when the question was asked in the first quarter of 2016.
“I think the odds are not conducive to a bear market, but weakness in corporate profits is one of the main reasons,” says Chuck Carlson, CEO of Horizon Investment Services.
The president of Envision Capital Management in Los Angeles, Marilyn Cohen, believes stocks are moving in a bear market. “There is hardly any first-rate revenue growth. Businesses cannot grow if all they do is take the excess cash, borrow in the bond market and repurchase shares,” says Cohen.
The World Is Flat
There is a big change from the previous quarterly survey when experts thought that the outlook was the best for the US market. Now, 39{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} think the United States is the place to be, while39{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} prefer international stocks over the next year.
Michael K. Farr, president of Farr, Miller and Washington, says: “While we are of the belief that the rate of economic development will be reticent in the United States, we believe it builds up well against most other countries.”
The remaining 22{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} say that the returns will be approximately the same over the next year.
LSI Keywords
bear market, stock market, financial market
