Why the S&P 500 could continue to climb towards the end of the year, with 21% still holding its rally in 2021

The S&P 500 began a busy week for third-quarter earnings on Monday, clinching its 56th record of the year, reflecting a staggering 21.6% gain already this year.

More dramatically, the new high-water mark means S&P 500 SPX,
+ 0.47%
According to Dow Jones market data, last year’s epidemic-induced solution has more than doubled from the worst, indicating a 104.1% gain from the beer-market low of 2,237.40 set on March 23, 2020.

According to Ryan Detrick, chief market strategist at LPL Financial, despite its sharp gains, market record-setting methods may still hold for a while longer, pointing to a number of factors, including seasonal and economic factors, indicating that the S&P 500 could hold. Climb at the end of the year.

To begin with, there was already a “sort of stealth correction” this summer, where the S&P 500 has risen 8% since the end of April, but the benchmark average personal stock has actually endured a correction of more than 10%, Detrick said in an emailed comment Monday.

However, in late October often the stock usually marks a historic low before rallying towards the end of the year.

Has the S&P 500 already reached its lows by the end of October?

LPL Research, Factset

“In fact, the fourth quarter as a whole is the strongest quarter in history, on average, the S&P 500 grew 4% and finished about 80% longer,” he wrote. “November, meanwhile, is the strongest month of the year – both since 1950 and in the last decade.”

Out of season, he pointed to “yields of economically sensitive stocks, commodities and even bonds,” such as financial XLFs,
And copper HG00,
+ 0.44%,
Which were “largely stagnant from the beginning of the girl” but have recently begun to get higher. 10 year Treasury yield TMUBMUSD10Y,
Monday climbed to about 1.634%, representing an increase of more than 50 basis-points since the low in July.

Dow Jones Industrial Average DJIA,
+ 0.18%
Monday also came close to a record high, when the tech-heavy Nasdaq Composite Index comp,
+ 0.90%
According to Dow Jones market data, September 7 ended less than 1% off the record.

Detrick also pointed to the sharp decline in the case of US Covid-19 since the beginning of September, which is a bullish factor for the stock and a record number of U.S. workers have voluntarily quit their jobs.

“Generally, quitting is seen as a sign of a strong economy and a healthy labor market, because the most common reason people voluntarily quit their jobs is to start a new job – workers are more hesitant in times of economic uncertainty.” He said.

To be sure, this fall could be different, such as the Federal Reserve jumping into higher inflation, which has been taking longer than expected, and the central bank plans to start cutting $ 120 billion in treasury and monthly emergency purchases. Agency Mortgage-backed securities, a major source of market liquidity since March 2020.

Read on: Yellen predicts inflation will return to normal in the second half of 2022

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