Just because the Fed is on pause and has said they’re around neutral doesn’t mean the business cycle is nearly over.
With the 2019 NCAA tournament Final Four set, it makes sense for this week’s Market Signals podcast to focus on a “final four” as well. The “four” in this case, however, are four important factors that may influence where financial markets go next. The LPL strategists also note an additional four factors that will likely affect the economy over the remaining year.
Four Factors for Financial Markets
The S&P 500 gained more than 13% in the first quarter, marking its best first quarter since 1998. The LPL strategists cite the following four factors as reasons this stock rally could continue or weaken: 1.) policy, 2.) the U.S. economy, 3.) rates, and 4.) profits. These factors will be extremely important for the remainder of 2019. The strategists see their expected effects to be potentially positive.
Four Factors for the Economy
On the economic front, there are also four factors likely to play significant roles in how things play out. They are 1.) the cautious Federal Reserve (Fed), 2.) a pickup in capital expenditures (CAPEX), 3.) global growth, and 4.) a rebound in consumer and business confidence.
The global growth theme is the most concerning, as Europe and other parts of the world economy continue to weaken. The strategists do view the Fed on pause a positive and look for the economy in general to improve during the second half of 2019.
Stocks historically have done quite well during April. In fact, over the past 20 years no month has a better average return than the 1.7% return from the S&P 500 Index in April. Incredibly, this month has closed green 13 of the previous 14 years for the S&P 500 and 14 of 14 times for the Dow.
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