Stocks rise with focus on Washington - What's next for markets?
- Traders are still trying to figure out how the market will perform in
the coming months in years after the election of Joe Biden sparked
outsized
rallies in everything from cyclical stocks to sustainable energy. That's
on
top of a massive surge seen since the coronavirus-induced selloff in
March
2020, which pushed the "retail bros" into the market and was later fueled
by vaccine optimism and expanding U.S. stimulus. Stock futures are again
in
the green this morning, boosted by Netflix, whichoared 12% AH on strong
subscriber growth and possible share buybacks.
- *The bulls:* Goldman says the market is in the early stages of a bull
phase following an "explosive" valuations-led rebound in equities that
tends to mark the start of a new cycle. While the risk of a correction in
stocks is increasing, the firm recommends using any dips to buy more
shares. "You do have elevated valuations, no question about it, but value
is comparatively cheap and we don't think a 6% GDP growth rate this year
is
fully priced in," added Ernesto Ramos of BMO Global Asset Management.
- *Middle ground:* Bank of America cautioned that stocks are already
trading as if the vaccine rollout and economic rebound will be smooth
over
the spring and summer. Given the limiting further upside, the bank kept
its
year-end target for the S&P 500 at 3,800, flat with current levels.
- *The bears:* Not many on are taking this position for 2021, but see
possible hazards in the years ahead. Vanguard estimates equities over the
next decade will produce returns that are roughly half of what their
historical average, while GMO and Research Affiliates are even more
bearish. LPL Financial also thinks traders are not pricing in the risk
of a
potential double-dip recession in 2022. "Historically, the average
recession has lasted about one year, which suggests perhaps more time may
have been needed for the economy to properly reset."
- *Some statistics: *The S&P 500 has gained about 13% since Election Day
2020, marking the the best post-election market performance for a new
president in modern history, according to CFRA Research. Other
performances? From Election Day to Election Day, the S&P 500 rose 57%
under President Trump, and climbed 53% and then another 52% under
President Obama.
- Traders today will also look for details and policy changes in the
Biden agenda, such as clean energy and infrastructure priorities.
|Today, 4:51 AM|1 Comment
- Traders are still trying to figure out how the market will perform in
the coming months in years after the election of Joe Biden sparked
outsized
rallies in everything from cyclical stocks to sustainable energy. That's
on
top of a massive surge seen since the coronavirus-induced selloff in
March
2020, which pushed the "retail bros" into the market and was later fueled
by vaccine optimism and expanding U.S. stimulus. Stock futures are again
in
the green this morning, boosted by Netflix, whichoared 12% AH on strong
subscriber growth and possible share buybacks.
- *The bulls:* Goldman says the market is in the early stages of a bull
phase following an "explosive" valuations-led rebound in equities that
tends to mark the start of a new cycle. While the risk of a correction in
stocks is increasing, the firm recommends using any dips to buy more
shares. "You do have elevated valuations, no question about it, but value
is comparatively cheap and we don't think a 6% GDP growth rate this year
is
fully priced in," added Ernesto Ramos of BMO Global Asset Management.
- *Middle ground:* Bank of America cautioned that stocks are already
trading as if the vaccine rollout and economic rebound will be smooth
over
the spring and summer. Given the limiting further upside, the bank kept
its
year-end target for the S&P 500 at 3,800, flat with current levels.
- *The bears:* Not many on are taking this position for 2021, but see
possible hazards in the years ahead. Vanguard estimates equities over the
next decade will produce returns that are roughly half of what their
historical average, while GMO and Research Affiliates are even more
bearish. LPL Financial also thinks traders are not pricing in the risk
of a
potential double-dip recession in 2022. "Historically, the average
recession has lasted about one year, which suggests perhaps more time may
have been needed for the economy to properly reset."
- *Some statistics: *The S&P 500 has gained about 13% since Election Day
2020, marking the the best post-election market performance for a new
president in modern history, according to CFRA Research. Other
performances? From Election Day to Election Day, the S&P 500 rose 57%
under President Trump, and climbed 53% and then another 52% under
President Obama.
- Traders today will also look for details and policy changes in the
Biden agenda, such as clean energy and infrastructure priorities.
|Today, 4:51 AM|1 Comment
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