Both Wall Street and Google say the stock market’s record-setting run is safe into year end.
And what a run it has been since a summer dominated by fears of an impending U.S. recession. Powered by big cap tech names Apple (AAPL) and Microsoft (MSFT), the Dow Jones Industrial Average has zoomed ahead by about 7% in the past three months. The S&P 500 and Nasdaq Composite have tacked on roughly 7.5% each during that same span. In total, the Dow alone has added an impressive 4,165 points year-to-date.
Three interest rate cuts from the Federal Reserve this year, promises by Fed officials to keep rates low into 2020 and surprising resilience by Corporate America to President Trump’s trade war with China have fueled the eye-popping gains in the markets.
So much for that recession.
Now with just over a month left in 2019, most pros on Wall Street think the greater risk to investors is missing out on more gains rather than a shocking 10% to 20% pullback like we saw last December.
“I think 2020 we are very constructive on. Risk assets will continue to perform from here on out. We are positioned that way today,” Invesco Global COO Mo Haghbin said on Yahoo Finance’s The First Trade.
“I think for day traders and short-term folks the market looks a little frothy here. But I think in the intermediate term — six months plus —history is clear that new highs in markets typically beget better than average returns six months out,” adds Riverfront Investment Group strategist Chris Konstantinos. “So I think you have to respect the message of the market that something good is happening.”
Google is on board with that logic, points out research outfit DataTrek.
Despite the Dow touching new records recently, Google search interest in the “Dow” is at its lowest levels in more than 12-months, DataTrek finds. DataTrek says this is normal and a good indication of markets being poised to head higher. Peak periods of Google search volume over the last year, DataTrek research shows, has occurred around wild swoons in the market (late December 2018; mid-to late-May 2019; mid-August 2019).
“On balance, this is good news since the U.S. economy is heading into holiday shopping season. Yes, less than half of Americans own stocks but equity markets are still important to general consumer confidence,” writes DataTrek co-founder Nicholas Colas.
Hey, who is going to argue with Google’s stock calls?