{"id":8093,"date":"2019-07-01T19:25:42","date_gmt":"2019-07-01T19:25:42","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=8093"},"modified":"2022-02-26T13:07:15","modified_gmt":"2022-02-26T13:07:15","slug":"3-things-that-may-move-the-market-this-year","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/3-things-that-may-move-the-market-this-year\/","title":{"rendered":"3 things that may move the market this year"},"content":{"rendered":"\n<p>We\u2019re now halfway through 2019, and the stock market has\ndelivered solid performance year-to-date. It\u2019s difficult to believe that the S&amp;P\n500 is up nearly +20% in the first six months, but investors must remember that\nthe market\u2019s stout performance is coming off a miserable Q4 2018 where the\nS&amp;P 500 flirted with bear market territory.<sup>1<\/sup> Much of the gains in 2019 have\nbeen the market simply retracing losses endured at the end of 2018. As I write,\nthe market is less than a percent below its all-time high.<\/p>\n\n\n\n<p>The trillion-dollar question, then, is where does the market\ngo from here? What can we expect in the back half of 2019? Below I\u2019ll take a\nlook at three events that could shape the equity market in 2019. <\/p>\n\n\n\n<p>________________________________________________________________________<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_6_30&amp;content=stock_market_outlook_report\">Don\u2019t Let Headlines Get in the Way of Your Investments!<\/a><\/strong><\/p>\n\n\n\n<p>Do not forget that the U.S. economy is resilient and that\nstocks have historically climbed the \u201cwall of worry.\u201d Often, the more investors\nlet newsworthy headlines cause them to worry about what could shake-up the\nmarkets, the more upside stocks potentially have. Low expectations set a low\nbar, and stocks can surprise to the upside with good news and good outcomes.<\/p>\n\n\n\n<p>So instead of focusing too much on worrisome headlines, I suggest staying focused on the hard data. To help you do this, we are offering all readers a look into our just-released <strong>Stock Market Outlook report. <\/strong><\/p>\n\n\n\n<p>This\n22-page report contains some of our key forecasts to consider such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em>Inside the China tariff war<\/em><\/li><li><em>Why are Zacks strategists (including me) staying\nbullish?<\/em><\/li><li><em>Stock market returns expectations for 2019 <\/em><\/li><li><em>Small-cap and large-cap outlook in 2019<\/em><\/li><li><em>What of cuts in global growth?<\/em><\/li><li><em>What produces 2019 Optimism?&nbsp; <\/em><\/li><li><em>And much more.<\/em><\/li><\/ul>\n\n\n\n<p>If you\nhave $500,000 or more to invest and want to learn more about these forecasts,\nclick on the link below to get your free report today!<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_6_30&amp;content=stock_market_outlook_report\">IT&#8217;S FREE. Download the Just-Released July 2019 Stock Market Outlook<\/a><sup><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_6_30&amp;content=stock_market_outlook_report\">2 <\/a><\/sup><\/strong><\/p>\n\n\n\n<p>________________________________________________________________________<\/p>\n\n\n\n<p><strong>Event #1: Escalating\nGeopolitical Tensions Resulting in War <\/strong><\/p>\n\n\n\n<p>Last week saw tensions escalate between the U.S. and Iran,\nwith the U.S. just moments away from a retaliatory strike on Iran before it was\ncalled off at the last minute. Tensions rose when the U.S. accused Iran of\nusing mines to attack commercial ships in the Strait of Hormuz, which is a key\nshipping lane for the world\u2019s crude oil supply. Days later, Iran shot down a\nU.S. drone it claimed had entered Iranian airspace. <\/p>\n\n\n\n<p>Whether or not the tension will escalate from here is a\ncritical uncertainty. An analysis of several geopolitical crises since 1900\nfound that the Dow Jones Industrial Average often had knee-jerk reactions to\nescalations, falling an average of -6.8% within a month of a crisis. However,\nthe Dow also quickly recovered \u2013 six months after the post-crisis low, the Dow\nwas trading, on average, 1.6% higher than before the crisis erupted. Generally, the market\nhistorically sells off in anticipation of conflict but begins to rally once\nconflict begins. <\/p>\n\n\n\n<p>The other historical reference that could be valuable here\nis what happened during the Arab Oil Embargo, when OPEC nations cut off oil\nsupplies to the U.S. and other countries. Oil prices jumped nearly 4x in five\nmonths, and U.S. stocks suffered a correction \u2013 falling more than 10% \u2013 that\nlasted throughout the embargo.<sup>3<\/sup><\/p>\n\n\n\n<p>This event is very much a \u201cwait-and-see\u201d for investors,\ngiven we have very little information about negotiations or talks between the\ntwo nations. On the energy front, however, the global economy is awash in oil\nsupply and the U.S. is capable of ramping up production very quickly, making prices\nless of a concern.<\/p>\n\n\n\n<p><strong>Event #2: A Trade\nBreakthrough or Breakdown with China<\/strong><\/p>\n\n\n\n<p>Last week kicked off a set of hearings in the U.S. trade\nrepresentative\u2019s office so that consumers and corporations could voice concerns\non trade. On the agenda: consumer and corporate grievances related to the\nplanned 25% of additional tariffs on $300 billion of Chinese imports. <\/p>\n\n\n\n<p>To date, the consumer has largely been shielded from direct\nimpact of tariffs, as many consumer goods have not yet been taxed. <em>The<\/em> <em>Wall St. Journal <\/em>analyzed some of the\ngoods that would get caught up in this latest round of tariffs \u2013 273 categories\nin total \u2013 and found that there were few comparable alternatives produced\ndomestically or elsewhere for many of the goods. Items like fireworks, fishing\npoles, and electric blankets almost exclusively get imported from China, to the\ntune of $66.3 billion in 2018. <\/p>\n\n\n\n<p>Many companies have voiced concern over the latest round of\ntariffs, as they have not been able to find substitute suppliers to tide them\nover until a broad agreement is reached. President Trump and Chinese President\nXi Jinping agreed to have an extended meeting in Japan next week at the G-20\nSummit, but neither side has indicated that the purpose of the meeting is to\nreach an agreement.<sup> 4<\/sup> Stocks have had a difficult time breaking\nthrough to new all-time highs, in my view, because of uncertainty over the U.S.\n\u2013 China trade issue. Until some resolution is reached, I believe stocks will\nstruggle to move materially higher.&nbsp; <\/p>\n\n\n\n<p><strong>Event #3: An Interest\nRate Cut <\/strong><\/p>\n\n\n\n<p>The stock market has been particularly receptive to the\nFed\u2019s shifting stance on monetary policy, in my view. I think the Fed\u2019s\nannouncement at the turn of the year to effectively pause interest rate\nincreases in favor of a \u201cpatient\u201d approach was and is a key catalyst to the\ncurrent market rally. <\/p>\n\n\n\n<p>Market participants now appear to be convinced that the\nFederal Reserve is actually going to cut interest rates sometime in 2019, a\nmove that I think could give the bull market more runway by increasing investor\nconfidence and nudging investors into equity markets (since fixed income\nmarkets offer relatively low yields). <\/p>\n\n\n\n<p>But there\u2019s another side to this story, and that is what\nhappens if the Fed <em>does not <\/em>cut\ninterest rates as the market is hoping. I think in that scenario you could see\na volatile back half of 2019. <\/p>\n\n\n\n<p><strong>Bottom Line for\nInvestors: Don\u2019t Forget About the Wall of Worry<\/strong><\/p>\n\n\n\n<p>In any given year, the market is faced with fairly\nconsequential events and \u2018concerns\u2019 that keep investors on edge. But you should\nremember that the U.S. economy is resilient and that stocks have a long,\nstoried history of climbing the \u201cwall of worry.\u201d Often times, the more\nconcerned investors are about stories or events that could shake up the\nmarkets, the more upside stocks potentially have \u2013 it creates a scenario where\nlow expectations set a low bar, and stocks can surprise to the upside with good\nnews and good outcomes. <\/p>\n\n\n\n<p>So instead of letting headlines cause you to worry, I recommend staying focused on the long-term and on key economic indicators. To help you do this, I invite you to <strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_6_30&amp;content=stock_market_outlook_report\">download our Just-Released July 2019 Stock Market Outlook Report.<\/a><\/strong><br> <br> This Special Report is packed with our newly revised predictions for 2019. For example, you&#8217;ll discover Zacks\u2019 view on:\u00a0<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em>Inside the China tariff war<\/em><\/li><li><em>Why are Zacks strategists (including me) staying\nbullish?<\/em><\/li><li><em>Stock market returns expectations for 2019 <\/em><\/li><li><em>Small-cap and large-cap outlook in 2019<\/em><\/li><li><em>What of cuts in global growth?<\/em><\/li><li><em>What produces 2019 Optimism?&nbsp; <\/em><\/li><li><em>And much more.<\/em><\/li><\/ul>\n\n\n\n<p>If you have $500,000 or more to invest, learn how you may be able to prepare your portfolio for changes in the economy by reading this new report today.<strong><sup>5<\/sup><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Geopolitical tensions, China trade, and interest rates could drive market movement<\/p>\n","protected":false},"author":3,"featured_media":7430,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[63,71],"tags":[],"class_list":["post-8093","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitch-on-the-markets","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8093","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=8093"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8093\/revisions"}],"predecessor-version":[{"id":10742,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8093\/revisions\/10742"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=8093"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=8093"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=8093"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}