The U.S. stock markets have hit headlines this week and last, thanks to massive slides on every notable index. Investors lost confidence in the face of ongoing trade disputes between America and its largest trade partners. The President’s tariffs and subsequent foreign retaliations sent many major stocks into almost a full week of decline, but that trend could now be shifting, and there are still analysts who have optimism about the stock situation for the rest of the year.
Byron Wien, an executive and analyst from The Blackstone Group, said in a recent interview that “the upside of the market is that we can get close to 3,000 [points in the rest of 2018]”. A point increase this significant could mean widespread returns for shareholders who are invested in the right companies.
Recent Slides and Trade Rhetoric Have Damaged Investor Confidence
Monday saw the worst slide in the stock market in months, which had investors at a point of low confidence that hasn’t been seen since the market volatility earlier in the year. However, indexes started to claw back the losses on Tuesday, with the Dow Jones Industrial Average up +0.12%, the S&P 500 up +0.22%, and the NASDAQ up +0.39%. It was a welcome reprieve from the gloom that has existed in the stock market since U.S. trade relations reached new lows.
Hostilities in trade between the U.S. and China, Canada, Mexico, and the European Union were a leading factor in the price drops, at least if you talk to most analysts. Wien believes that there is still a case for calling the current market a bull market, because earnings per share are still tracking well, so most publicly traded companies are still in great shape. Wien said on Tuesday that average earnings per share growth from the second quarter should be 25% more than the first quarter of the year.
Even so, Wien warned that there is still confusion and unease in the market as investors are worried about policy and the rhetoric that is coming from Washington. Wien also said that the November midterm elections would have an impact on the stock market, as the resulting government would have a direct influence on policy.
Stock Situation, It’s Not Time for Panic
The key point for investors is that the slide has been significant, but the market isn’t crashing down yet, and probably wont at any time in the foreseeable future. Outside of the investment side of the economy, most businesses are performing well, and second quarter results could reveal some important perspective for investors who have been shaken by the trade worries in recent weeks.
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