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Four Factors to Consider Before Determining Your Long-Term View on U.S. Stocks

Stocks rose worldwide over the past week -- ranging from +2% in U.S. big caps to +6% in gold -- as investors swelled with sudden courage in response to positive reports on Chinese economy and glimmers of hope that European governments can get their financial houses in order.   The week's results erased four weeks of losses, including the despairing session that ensued on June 7 after a disappointing report on U.S. employment.  Meanwhile, the result of the past 35 trading days, or seven calendar weeks, are still largely negative, ranging from a loss of 5.5% for U.S. stocks and -8.5% for Europe. Only gold stocks have eluded the smoke monster, rising 7% in the span. The variation in one-week and one-month results illustrate perfectly how investors are showing that they are  hopeful but unconvinced  that recent strength in gross domestic product (GDP) growth and corporate income advances are sustainable, and therefore won't buy stocks heavily until prices are so cheap that they discount worst-case scenarios. In other words, they want a high risk premium before buying -- sort of like demanding a 72-month warranty before buying an expensive car. To read about the four factors you should consider before investing click here.
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