Stock investors have had a good run for the past 12 months, with many of the most popular investment stocks performing beyond expectations. A stable and steadily growing economy, as well as tax cuts promised by the government, have meant that investor confidence has grown and tech stocks in particular have been performing exceptionally well. We’re now more than a week into 2018, and there are no signs of growth slowing. The start of 2018 has been the best that the U.S. stock market has seen in over five years, and it could be an ideal time for new investors to get into the market.
Stock Market, The Best Early Year Performance Since 2003
The Dow Jones Industrial Average surpassed 25,000, which is a historical high for the index that has been calculated for over 120 years. Corporate profits are increasing, and this is exactly what a number of analysts hoped to see, with confidence coming from President Trump’s economic policies and election promises. Unemployment is at a 17-year low, and economic growth is at a 3-year peak. Investor confidence in the stock market could also be related to the fact that key economies around the world are growing at a rate similar to that of the United States.
Investors can take further confidence from knowing that corporations are performing well. Profits have been steadily increasing and that means that a number of companies have significant cash reserves. A significant portion of their profits are being returned to shareholders in the way of dividend stocks.
Companies like Boeing (NYSE: BA) and Caterpillar (NYSE: CAT) have performed exceptionally well since the change of government, and tech companies like Apple (NASDAQ: AAPL), NVidia (NASDAQ: NVDA), and Micron (NASDAQ: MU) have seen surges in value. Even General Electric (NYSE: GE), a company with traditionally slow but stable stock, has increased value by 6.3% since the start of 2018.
How Long Will the Favorable Conditions Continue?
The Federal Reserve is not likely to make major changes to interest rates any time soon, and this year companies will start to see the benefits of reduced corporate taxation. 2018 could continue with huge growth in the stock market that means strong financial gains for investors.
The stock market is volatile by nature and growth cannot be sustained forever. At this stage, there’s nothing significant on the horizon that would lead to sustained losses across major stocks simultaneously, and this is extremely positive for anyone who owns stock. It could also represent a great opportunity for anyone who wants to diversify with new stock, or anyone who wants to start investing in the stock market for the first time.
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