Stock Market Forecast

Stock Market Outlook & Predictions

Once again a rep at the Fed had to make a speech about possible interest rates hikes.  The intent was not appreciated by investors, and the Dow Jones dropped about 700 over two day.

Perhaps the intent is an effort to cool inflationary expectations as they mentioned future rates hikes in 2022 and 2023. Additional news regarded jobless claims, which were up 52,000 above expectations. Supply side issues including oil and computer chips are weighing on the recovery.

Another report on jobs has more people quitting their jobs recently. Could be the turmoil in the labor markets is uneasing some of the large cap investors who are seeing higher wages for good workers and more inflation will erode profits.

On Friday, the Dow Jones 30 fell -533.37(-1.58%) to 33,290.08, while the S&P 500 fell -55.41(-1.31%) to 4,166.45. The Nasdaq lost -130.97(-0.92%) to 14,030.38, while the Russell also declined -49.71(-2.17%) 2,237.75.

The downward momentum will likely subside, as the Fed messages will lose their impact. GDP is rising, consumer spending is up, and earnings reports are generally positive. This should carry the stock market outlook for 6 months and well past 2022. But will 2023 be the year of the crash when investors see rates rise while staring at the US debt load and trade imbalance with China? The Democrat deficit supported strategy will run out of gas at some point which suggests that rates might not be raised for 10 years.

As for tomorrow, next 3 months, or next year, the outlook is positive but maybe not to the satisfaction of some investors.

Consumer spending rose 11.3% in the Q1, yet fell 1.3% in May. Consumers shifted their spending into hospitality and leisure and small ticket items. Yet, consumer spending was 20% higher in May versus same time in 2019.  GDP for the first quarter was up 6.4%.  The economy may be growing at above 10% rate this 2nd quarter.  The cyclical change is still rolling along which is why investors are feeling confident. However, there’s a lot of phoniness in this market with Tesla, Bitcoin, Dogecoin, AMC and other stocks flying high.

The great consumer spending rotation to services has begun,” said Gregory Daco, chief U.S. economist at Oxford Economics. “As health conditions continue to improve and the economy reopens, generous fiscal stimulus, rebounding employment and rising optimism will help unleash pent-up demand.  Daco forecast that consumer spending, the main driver of the U.S. economy, could grow this year by around 9.5%. If so, that would amount to the strongest such showing since 1946, when the nation was emerging from World War II rationing and other restrictions.”  from report on the thenewstribune.com.

The Fed likes inflation and wants to hit targets that aren’t really outrageous. The Fed will win, and inflation may help fuel a great recovery. Joe Biden’s $6 Trillion infusion won’t hurt either.

Today, the Dow Jones is up today +119.12(+0.35%) to 34,566.26, the S&P hit a new record lifting +24.67 (+0.58%) to 4,244.22, while the NASDAQ rose +104.29 (+0.75%) to 14,016.04.  The Russell 2000 sagged a little by -8.19(-0.35%) to 2,318.93.  WTI oil prices is up over $70 to $70.25.  Lumber prices continue to fall which is great news for the housing market and pressure on home prices. Rising consumer prices due to supply shortages may grow large cap profits while putting a burden on small businesses looking to recover.

Major indexes today in the stock markets
Screenshot courtesy of Google Finance.

Top Losing Stocks on the Dow

dow losing stocks
Screenshot courtesy of Barchart.com

S&P Sectors

IT, Health Care and Consumer Discretionaries lead the way today.

Screenshot courtesy of Barchart.com

This brings us to the matter of the Democrats and how they’re treating rich corporations and the billionaires. Right now, it looks like they’re serious about taxing them. They’ve spent so much money, they have no choice but to tax the rich to get the trillions needed. The working poor have no money. The G7 accord to ruin the billionaire’s tax havens is excellent news but likely won’t be enforceable. Too much corruption internationally.

For the average American, taxing the rich is a good thing. However, small business may need a bigger boost. 100,000 businesses were lost, but like a forest fire, the landscape could look very lush and green in 2022.

WTI Oil price has risen above $70 and are poised to rise.  Experts are torn about how high they might go, but you can bet the will rise above $80 a barrel with gas prices skyrocketing too. Thankfully, tax increases are still off in the future. Gold is staying high around $1894.10.  In 2023, Gold could take off in the face of economic slowdown, rising taxation, and rising interest rates.

Looking for good stocks to buy? See more on 5G stocks, top Dow Stocks and tech stocks. See today’s top gaining stocks below.

Top Gaining Small/Mid Caps as of Thursday June 17th

op gainers small and midcap
Best performing small and mid cap stocks June. Screenshot courtesy of Yahoo Finance.

Commodities like lumber, oil and steel prices are inflating fast so this has to be another stock market crash signal. The rising lumber prices are adding an extra $34,000 to the price of a home. This will affect the housing market forecast.

Inflation was reported at 4.2% for last month and .8% for consumer prices. Wages grew strongly in May  There are rumors the Fed might raise rates to control the warming trend. Jobs numbers were off dramatically as some economists suggest workers don’t want to go back to work.

Yet what they might be overlooking is the factor that’s also harming the housing market: lack of supply. With the pandemic shutdown in the US and with regulatory restriction on materials/manufacturing, the market is grossly undersupplied. The economic recovery will be hampered by the adjustment of people returning to work and by supply chain issues (including from China where containers are empty).

The stock market trend away from tech stocks (FAANGs) and growth stocks to industrials continues. Wealthy and institutional investors may be withdrawing from US equities and this might be due to tax increases, inflation, potential rising rate rumors, and a belief that the economy may not grow strongly from here on. Yet, in the short term, some companies are benefitting from inflation.

The Fool advises to check out U.S. Bancorp (NYSE:USB), Glacier Bancorp (NASDAQ:GBCI), Progressive Auto Insurance (NYSE:PGR), and Chubb Alarms (NYSE:CB) as stock which might benefit from inflation.

And investu says you can avoid picking individual inflation boosted stocks by investing in these funds:

  • IShares S&P GSCI Commodity-Indexed Trust (NYSE: GSG)
  • Global X Internet of Things ETF (Nasdaq: SNSR)
  • Vanguard Real Estate ETF (NYSE: VNQ)
  • Invesco DB Base Metals Fund (NYSE: DBB)
  • SPDR Gold Trust (NYSE: GLD)

Is inflation really all the bad for the economy?  Inflation is currently caused by insufficient supply (productivity) combined with excessive money supply.  Too many dollars, trillions in fact, chasing stocks, real estate, commodities, consumer products, and more.  Inflation can support speculative investment and push money where it’s needed most. Inflation increases liquidity and spending that way, so it can be good.

Yet jobs, GDP, consumer spending are all rising and stimulus spending will continue, so the downside by the bears might be overstated. The possibility too that investors may be eyeing better returns in Europe and Asia and this could erode US market strength over the next few years. The perception of Democrat taxes, regulations, and anti-energy market policies will weigh the market down whether Dow Jones or Russell 2000.

As amazing as the US pandemic recovery is going, there is still significant problems in Brazil, India and other countries as dangerous new Covid 19 variants persists. That will help suppress demand and keep inflation under control.

See more on the Dow Jones Forecast, S&P 500 Forecast and NASDAQ forecast, along with this next weeks outlook, and the 6 month forecast. Keep an eye on potential stock market crash threats and review the top market crash indicators to protect your hard earned investment.

The Fed’s J Yellen said the proposed $6 Trillion spending plan would be spread out over 8 years, which could lend strength to the economy, unless the rosy picture breaks down and ends in a vicious stock market crash .  And the worries over a major correction are just ahead as well.   What are the crash indicators?  Is there a way to hedge the threat?

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Where Will the Stimulus Funds Really Go?

Some believe the stimulus spending will end up boosting imports of foreign products and not help the US recover. Some of these funds could actually convert to investments in China bonds and equities. China is a major competitor and one coming of the Covid 19 pandemic with minimal debt.

Reports showed American foreign investments have doubled recently while domestic investments are beginning to lag. The tax hike announcement worsens that funds exodus, and pushes the markets closer to the big day of correction ahead. The wealthy will not willingly pay 44% tax and instead will move their money to safer havens and any tax increases will be passed onto customers.

These facts plus rising imports will begin to eat away at the economic recovery, which right now is looking weaker than forecast.

Markets look ahead to economic normalisation as vaccines will go around. Stock prices are likely to rise gradually while looking at upcoming earnings,” said Tomo Kinoshita, global market strategist at Invesco Asset Management in Tokyo. — from Reuters report.

Mounting euphoria and “irrational exuberance” in the markets are a concern so you may want to look into hedging for a crash. See more below on a potential crash scenario below.

Tech has been hot.  Investors should investigate the best tech stocks, including Google, Facebook, Amazon and Tesla. Tesla is up $21 in the last 2 day.   Check out the oil stocks, 5G stocks and find those that are ready rise in value.

Stock Market June 17, 2021:

Good employment and earnings reports are sending the indexes higher.   The outlook for Tomorrow and next week and the next 6 months looks positive (with big correction worries). Oil is strong and US dollar is rising.

S&P 500 : 4,221.86 ↓
Dow Jones 30 : 33,823.45 ↓
Nasdaq : 14,161.35 ↑
Russell 2000 :  2,287.46 ↓
Crude Oil : $70.92 a barrel ↓
Gold : $1,776.40 per ounce ↑
US Dollar : $91.90 ↑

US GDP to Grow 7.9% in 2021

US Gross Domestic production grew 6.4% in the 1st quarter, no doubt meeting the approval of investors.   Some are predicting GDP growth to reach near 10% in the April to June quarter.

Is anything still holding back the stock markets right now?  Three things: Biden Presidency, inflation, and the belief that interest rates have to go up sometime.  Smart investors look 6 months to 5 years down the road.

The Covid 19 infection numbers need to plummet to consistently low levels before investors feel at ease and stats show the 7 day moving average for Covid cases in the US is heading down.  A good sign for the economy and markets. Make sure you check out the best stocks to buy, penny stocks, best tech stocks, best 5G stocks, and watch the top gainers and top sectors going.  Check out the forecast for next week.

Inflation a Threat on the Horizon?

With the economic outlook brightening, Covid-19 cases falling and more fiscal stimulus on the horizon, nervousness about inflation is percolating. That means pricing power is set to become an intriguing alpha generator due to the wide variance in how companies cope with it” according to Tobias Levkovich, Citigroup Inc.’s chief U.S. equity strategist.

3 Month Market Forecasts

See more on the new outlook for April, May and June in anticipation of strong economic performance for the 2nd half of 2021. The markets should keep their current rate of growth until May even with volatility.

Who else is bullish on the US Economy?  Goldman Sachs for one. The company foresees GDP rising 6.4% for 2021, pushing the S&P up 14% to 3756, and growing to 4600 in 2022.

The Federal stimulus funds are on their way and there’s little doubt much of it will end up in the market this month.  Yes, $1.9 Trillion will make a lot of people happy.  Another factor to watch is inflation, which some say will really heat up. Inflation generally makes markets happy.

Additionally, vaccine production and distribution are progressing well, meaning there’s more optimism about the end of Covid 19.  At the end of this 3 month period, a sizable number of vaccinations will have happened and it means the economy could recover faster than expected.

However, Americans in particular are becoming aware that this administration is not producing GDP output the traditional way — that moving money from the rich to the poor (wealth equity is a good thing) doesn’t make a country suddenly competitive with China.  Other effects are being created via interstate business movement as companies try to elude high state taxes in New York, New Jersey and California and run to Florida And the housing market is forecasted to soar by spring.

Use good sense in your investment strategy and use stock market forecasts as a guide to gauge the key determinants of market trends.

Is a stock market crash or downturn even remotely possible over the next year? How about in the next 5 years? Should you wait and buy the lowest stocks in the next dip?

Hottest Market Sectors

See the list of best stocks to buy this week and check out hot housing stocks too.

Tech, Energy, and communications were the flavor of the day As the summer progresses, more accent will move to real estate as homebuyers hunt for any home they can afford. Post pandemic travel is off to a strong start.

Top Sectors
Screenshot courtesy of CNBC.

Market sectors which continue to show the best growth:

  • construction
  • consumer discretionary (travel, entertainment, retail)
  • technology (computer hardware/software, and technological service industry companies)
  • industrials (manufacturing, consumption and inflation drive commodity prices)
  • real estate (builders, brokerages, multifamily, commercial)
  • energy stocks (oil, green energy, electricity)
  • medical and health care (biotech)

6 Month Stock Market Forecast

Look ahead to the next 6 months and fall.  Moving into the summer season, with 218 million vaccinations completed as of today, consumers and businesses will get the green light to spend and sell.

Best Stocks to Buy


Which will be the best stocks to buy? Next 6 to 9 months: Which will be hottest stocks during the summer and fall?

Top Gaining Stocks (May 12, 2021)

Top Gainers Small & Mid Caps

Top small cap stocks this week. Screenshot courtesy of Yahoo Finance.

Small Caps This Week
Top Gaining Small Caps This Week. Screenshot courtesy of Yahoo Finance.

US Economic Forecast

Market Factors affecting 2021 Outlook to watch:

  • economy had a solid 4% growth in the 4th quarter 2020
  • inflation rises and low interest rates pushing treasury and bond prices down
  • markets climbed as investors seem optimistic
  • corporate earnings will sour in the 4th quarter
  • Fed says they’re not going to raise rates, and may not for years
  • $5 trillion sitting in money markets
  • Oil price is rising to $63 a barrel
  • S&P, and Dow keep reaching new records and NASDAQ and Russell 2000 are next
  • US dollar is falling
  • new government injecting $2.1 trillion in stimulus
  • Covid pandemic moving past its worst months?
  • trade war with China continues to heat up emotionally
  • Facebook, Google and Amazon stocks under pressure of DOJ anti-trust investigations
  • renter evictions, landlord bankruptcies looming
  • jobs reports very strong
  • earnings reports so far are strong

5 Year Long Term Forecast is Optimistic

The 5 year stock market forecast (and 5 year housing market forecast ) look really good too because the American consumer is well employed and will see plenty of jobs as business is rebuilt from the ground up. Intent to buy homes is strong and construction rates will grow fast through the spring.  If the economy stutters, the Biden admin will not be reluctant to give stimulus. Small business will need a transfusion, and it will get one.

The latest US jobs report is excellent. The 2020 to 2024 5 year forecast period is not priced into the market, but instead is focused on current earnings/sales and wishful thinking over the 5 year term.

Bank and Broker Forecasts

Goldman Sachs projects GDP will grow at a 5.3% pace in 2021 and forecasts a lower unemployment rate at 5.3%. They expect the S&P to rise 17% to 4,300 points, and driven by an expected 30% growth in corporate earnings.

Morgan Stanley, Wells Fargo and LPL Financial see the S&P rising 6% to reach 3,900. Oppenheimer boldly sees it hitting 4300.

Those US companies are becoming lean and powerful, and those who survive the pandemic will be unusually competitive in 2021. The question for some investors is whether airlines, cruise lines, hotels and other sectors are good long term buying opportunities, or whether buying more Tesla, Google, Facebook and Amazon stock is the safer route. Some believe they’re a good buy during a coming market correction.  Buy the correction they say.

Will Self Directed Investors be the Story in the Next 3 Months?

The growth of self-directed trading is impressive as day trading investors feel they can find the best stocks on their own. With the level of insight and opinion and stats available online, these self-directed investors are still guided by the same investment pros. It could be Wall Street feels threatened by a change in the investment landscape, with new investment tools, software and advisors becoming more in vogue.

There are plenty of ups and downs recently though to keep them cautious. And the odds of a stock market crash are low right now.

If self-directed stock trading is working for you, please let me know in the comments at bottom.

 

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See more on the best stocks to buy including penny stocks, oil stocks, 5G stocks, and perhaps small caps on the Russell index.

Still wondering about the Amazon stock price, Google stock price, and Facebook stock price forecast? Brush up on the Apple stock price lately. Anti-monopoly winds are blowing stronger and might hit gale force closer to the election as neither political party supports monopolies.

Important news of recent is the intent of US lawmakers looking to invest tens of billions of dollars in microchip manufacturing in the US. China has been pouring money into that industry. The rationale for this is due to the pre-eminence of chips in tech innovation as AI, 5G and robotics require faster, newer chips.

What Caused the Last Stock Market Drop in April 2020?

Here’s the key factors that took the market down in March and April.

  • Corona Virus work stoppage – no income, cities emptied,
  • a WHO global pandemic declaration
  • growth in US virus cases and deaths
  • US travel bans for Americans and advice to stay at home
  • oil price wars
  • bond market weakness
  • global economic setbacks
  • government corrective actions not enough to solve the issues

When Will US Consumers Return to Save the Markets?

It will take more than a 3 month shock to upset consumers. Banks too are very strong coming out of this recession. Bailouts help.

Questions About the Stock Markets

Your questions about stock prediction and the Stock Markets are likely regarding which are the best stocks to buy, which index has better performing stocks, and whether you should invest in the big tech companies? The markets are peaking so what will drive stock prices higher? Should you buy Tesla Stock, or Apple Stock and play follow the leader, or speculate on some energy stocks or even penny stocks?

 

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Nevertheless, the Dow Jones forecast, S&P forecast, NASDAQ forecast and Russell 2000 long term outlook are once again positive. The reason the majors have been doing so well, is due to the struggles of small business.

See more on the best stocks to buy including penny stocks, oil stocks, 5G stocks, and perhaps small caps on the Russell index. Check up on why Amazon stock, Google stock, and Facebook stock. Brush up on the Apple stock price lately.

Check the Tesla stock forecast along with forecasts for Amazon, Apple, Google, Facebook, and Netflix. See the post on best stock picks, best 5G stocks, and whether oil stocks are the best bargains of 2020.

 

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Yes, with US wages growing, unemployment low, and interest rates remaining low, you have strong evidence that Google stock price, Facebook stock price, Apple Stock Price, and Amazon stock price growth will continue in 2021. Tesla stock price is on fire.

More interesting insight: Stock Market TodayStock Market Next Week | Stock Market Correction | Is the Stock Market Going to Crash?Hedging a Stock Market Crash | 3 to 6 month Outlook | Stock Market Next Week | Stock Market Crash Signals  | Stock Investing | Stock Investing Sites | Self-Directed Stock Investing | 6 Month Forecast | Housing Market Predictions 2022 | Oil Price Forecast | Russell 2000 Forecast | Will Stock Prices Fall in 2021? | Best 5G StocksStock Market Forecast 2022Google Stock Price Forecast | Apple Stock Price Forecast |  AI Stock Market Prediction |  Tesla Stock Price Outlook | Amazon Stock Price Outlook | US Economic Forecast 2022 | US Job Outlook 2021

2 Comments

  1. Interesting article, not sure what the best investment tool is, to plan investment in markets or extraction from markets. As I got caught badly with the dip in March.
    Given nobody can really predict the future .

    I wonder how accurate S&P500 forecasts are as a starting point for planning, is there any history to show the accuracy of such forecasts ?

    1. Thanks Bruce. Good question. There’s not much available on forecaster’s S&P historic prediction success. If they’re not boasting about it, they may not have even beaten the market. There’s no telling about the political factors but right now, the relationship with China is heading down. That will benefit the S&P and Dow Jones, and the NASDAQ seems to be already ahead of the curve. And if President Trump doesn’t get elected, the markets will likely collapse. Investors will evacuate the US markets.

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