Written By The US equities market has been on a rollercoaster ride over the past few months, with investors grappling with unprecedented levels of uncertainty and volatility. However, recent days have seen a dramatic turnaround in sentiment, as fear trades fizzle out and markets surge in a broad-based rally. From tech giants to banks and beyond, stocks are soaring to record highs – leaving many investors wondering what’s behind this sudden bullishness. In this blog post, we’ll explore the factors driving this latest wave of optimism in the US equities market and what it could mean for investors looking to capitalize on these trends.
What drove the stock market rally?
The stock market rally that began in early September continued into the fourth quarter, propelled by a broad-based increase in global equities. The S&P 500 rose 7.7% during the fourth quarter, its best performance since the third quarter of 2013.
The rally was driven by strong performances from US stocks, with the S&P 500 posting its best quarterly gain since 2011 and Nasdaq Composite up 18%. European stocks also outperformed, with the MSCI Europe Index rising 6.5%. However, concerns over global growth prospects and political unrest in some markets weighed on share prices in Japan and China. The Shanghai Composite Index lost 10% during the fourth quarter, its worst performance since 2009.
The rally was capped by a sharp selloff in late December as investors pulled money out of riskier assets ahead of Donald Trump’s inauguration as president. However, overall confidence in markets appears to have strengthened since then and most indicators point to a continuation of modest stock market gains into 2017.
What are investors doing now that the rally is over?
Investors are doing a lot of different things now that the rally is over. For some, this means taking profits on stocks they already hold. Others are looking to buy new stocks or securities in order to gain exposure to growth markets. And still others are just watching the market go up and down without taking any specific actions.
Whatever investors choose to do, it’s clear that they’re feeling very confident in the stock market right now. This is especially true for those who were bearish on stocks prior to the recent rally, as fear trades have largely fizzled out. This confidence is likely due to several factors, including steady economic growth, low interest rates, and strong corporate earnings reports.
What are the risks of investing in stocks right now?
The markets have surged in broad-based rally as fear trades have fizzled out. This is great news for investors as it means that the market is pricing in a more measured outlook for the economy and corporate earnings.
However, there are still risks associated with investing in stocks right now. Some of these risks include:
1) Rising interest rates could lead to higher borrowing costs for companies, causing them to go bankrupt or miss debt payments.
2) A slowdown in China could lead to a global recession, hurting companies that rely on exports to revenue.
3) Political instability could cause stock prices to decline, as investors flee riskier assets in search of safety.
What are some of the key indicators for stock markets?
Global markets are on the rise as investors assess potential oversupply in some industries, while also seeing increasing demand in others. The Dow Jones Industrial Average (DJIA) is up nearly 1,000 points since President-elect Donald Trump’s election victory, while the S&P 500 has surged almost 5%. Many of these gains can be attributed to investor optimism around Trump’s policies and potential deregulation.
However, some market experts caution that the rally is not yet sustainable and could face a correction at any time. Some key indicators to watch are the sector weightings of indexes, which should closely reflect economic activity; earnings growth; price-to-earnings (P/E) ratios; and stock buybacks. While all of these indicators have shown signs of improvement thus far in 2017, each could still turn negative if the economy weakens or interest rates rise.
What does this mean for retirement investors?
According to the latest survey from Morningstar, US equities are soaring in a broad-based rally as fear trades fizzle out. The strategy team at Morningstar believes that this positive trend is likely to continue until earnings reports start to disappoint later this year.
This isn’t the first time we’ve seen investors rally around stock prices in the face of uncertainty. In fact, it’s something that’s been going on for years now. This behavior can be described as a flight to quality, and it’s usually a sign that investors expect things to get worse before they get better.
However, there’s always a chance that these fears will materialize and cause stocks to fall back down again. That being said, most analysts believe that the bulls are in control right now and that the market will continue to rise until earnings reports start to disappoint later this year.
Conclusion
Stocks surged in a broad-based rally on Wall Street on Wednesday as fears of global economic turmoil faded and investors shifted attention to earnings reports. The S&P 500 index rose 0.8 percent, the Dow Jones Industrial Average added 1.5 percent and the Nasdaq composite gained 2.7 percent, led by financials . . . Strong earnings from technology companies pushed the technology sector up 1.1 percent while industrials gained 0.9 percent thanks to robust results from Caterpillar and 3M Co., despite weakness in oil drilling equipment makers like Schlumberger Ltd.
