July 18, 2016
Markets & Investing
Can the Stock Market Stay at All Time Highs?
Despite an extraordinary week: a failed coup attempt in Turkey, multiple global terrorist attacks, a somewhat chaotic Republic National Convention, and a rising dollar, the stock market has reached and exceeded all time highs in the Dow Jones Industrial Average and the SP 500. It’s difficult to say but the stock market may becoming immune to bad events around the world…events that likely would have shaken equities markets in the past.
Then again, the high levels of the stock market is more likely to be a result of the extremely low interest rate environment created by the Fed. People are bringing money into stocks as they search for yield away from fixed income and stock prices appear to be exceeding the fundamental value of stocks.
So can the stock market stay at all time highs? Well, one of two things will happen: the market will eventually turn and correct itself in a terrible downward spiral that will bring stock prices back down to what their actually. OR, companies will come out with earnings that prove they are moving forward in line with where the stocks are priced at and new highs will continue to be reached.
Well, earnings season is upon us and we will soon know which one it will be.