Market Outlook for US Stock Is Much Divided

The US S&P 500 and Nasdaq have hit new closing records for the third consecutive trade session, while the Dow Jones last closed at a record high on February 6th. But with the continuous breakthrough of the stock market, the view has become very divided about the future’s outlook.

Optimists focus more on the fact that 70.9 percent of the 351 companies in the S.P. 500 have been reported to have better-than-expected results halfway through the last fiscal quarter, and overall earning in the fourth quarter is expected to grow 2.4 percent year-on-year.

On the other hand, a more pessimistic outlook for the market suggests that the expected price-to-earnings ratio of the S&P 500 has soared 19-fold, the highest in nearly two decades. And as 2020 is the year of the U.S. presidential election, further uncertainty is also expected to rise from this factor.

This is indeed a very unpredictable market. Many people, with their attentions on weakening business gains, have overlooked the boosting effect of the Fed’s monetary stimulus and thus underestimated last year’s stock market performance. The Fed’s Chair Jerome Powell had just concluded his semiannual economic report to the congress, and his testimony has been closely observed by market participants. The Fed is ready to take measures to boost economy if necessary, and in fact, Powell has reiterated his confidence on the sustainability of US economic expansion, now in its 11th year.