March was a milestone month for the stock market. On March 9, the bull run celebrated its seventh birthday – one for the record books. Starting its first uptick at the end of the recession in 2009, this bull market is the third longest in history and roughly two years longer than the average bull run. Reports of its imminent demise have been around since year three, with actual market results continually confounding Wall Street’s best. Mid-March, we saw the Dow Jones Industrial Average turn positive for the year, overcoming its bad start to the new year. So far, this market’s seventh year has turned ominous at various times – notably in February when it slid 15 percent to hover perilously close to the 20 percent traditionally required as a signal that a bull run is over. With this in mind, the investment community has greeted this birthday with muted enthusiasm – many brokers noted that more than 200 companies in the DJIA index are in bearish territory – down 20 percent or more from their 2015 highs. What are the trends for the market in the second quarter and beyond? Has the market topped out, and should we brace for change?
The experts have been no better at timing the market than the individual investor. The following factors are shaping forecasts and expectations.
- This market has continued its overall gains despite distrust and lingering fears of a return to recession. Some attributed its successes to the quantitative easing policies of the Federal Reserve – an unprecedented policy that was embraced by some investment experts, but not all. Some feared the Fed’s stimulus could be withdrawn at any point, ushering in a return to stock losses.
- Investors still have not returned to the market with an enthusiasm matching the speed with which they withdrew pre-2009. Investors appear to favor overseas stock funds and other investment instruments more than ever.
- Fears of a recession – here and worldwide – continue to linger. Some investors worry over the modest rate of economic growth in the United States and the slow rebound in the job market. More recently, declining oil prices and the consequences for energy companies and oil field suppliers have further cast gloom on economic predictions.
- Everything is relative. The U.S. economy and markets may not wow investors, but compared to those in China and in the European Economic Community, they look good. Consumer spending continues to rise with economic expansion expected to reach a modest 2.2 percent for the year.
- Of course, the slowdown in China and financial crises in Europe give rise to worries about declining U.S. exports to this part of the world. The dollar’s strength against other currencies also makes American goods pricier in foreign markets.
Weighing all the data and opinions, many investment strategists are anticipating a continued bull run – one that remain modest and slow. Bearish analysts will continue to cite worldwide debt crises and geopolitical strife as growing threats, but their bullish colleagues still think there is life in the old bull run yet.