Global stocks had an excellent first half of 2019. Today I am going to share a review of the action and reveal what we should expect in the second half of the year.
The global stock market was on fire in the first half of 2019.
- Nasdaq 100 (QQQ) +24%
- S&P 500 (SPY) +20%
- Vanguard Global Stock Market (VT) +17%
- Emerging Markets (EEM) +10%
Those strong gains have investors asking an important question. What should we expect in the second half of the year?
I am expecting more gains – here’s why.
4 Reasons Stocks Should do Well in Second Half of 2019
The Global Economy is Still Expanding Nicely: The pace of global economic growth is slowing a bit, but the global economy is still on pace to expand nicely in 2019 and 2020.
The World Bank, a well respected economic research firm is predicting global GDP to grow 2.6% in 2019 and 2.7% in 2020. 3% growth is considered very solid and anything less than 0% is a recession – so you can see the global economy remains safely away from a recession for the time being.
Corporate Earnings Set to Expand Further: The single most important factor for stocks is earnings, and corporate sales and earnings are set to expand further in the second half of 2019. After hitting a cycle low in the first half of 2019, earnings are expected to accelerate in the back half of the year. Take a look below.
Interest Rates are Set to Fall: Interest rate have a huge impact on stocks. When interest rates fall, it usually gives stocks a nice boost. Right now, short-term interest rates are near a 10-year high. That’s why the Federal Reserve has been hinting that it plans to lower interest rates in the second half of the year. If it happens – and I expect it to – it should be very good for global stocks.
US Stocks have Upward Momentum: The US stock market has a lot of upward momentum right now. If you think about it, US stocks have been able to weather some pretty tough speed bumps. That includes interest rates rising to a 10-year high, trade wars between the US and China and slower economic growth. Right now the path of least resistance is still higher.
The Big Picture on the Second Half of 2019
Despite the usual headwinds and speed bumps, global stocks are on a roll right now and I see more gains ahead in the second half of the year.
If you’re nervous – think about shifting out of growth stocks and into dividend stocks, bonds or cash.
But if you’re feeling confident, stay put and ride the momentum.
Disclaimer: This report is for entertainment purposes only. Every investor should consult with an investment advisor before making investment decisions. The Vodicka Group, Inc. is not a broker/dealer. We do not receive compensation for mentioning stocks. At various times, the clients, publishers and employees of Vodicka Group, Inc., may buy or sell the securities discussed for purposes of investment or trading.