S&P 500 & Dow Jones Index Continue to Rise

By Dale Gillham | Published 15 July 2019

Both the Dow Jones Index and S&P 500 continue to rise to make new all-time highs given that there is speculation that the Fed will drop interest rates once again. So will the Fed reduce interest rates or should they leave them on hold and is the rise in the markets sustainable?

Indecision continues to reign as investors are confused about the direction of the market. Many have held back expecting the Dow Jones Index to pull back or crash, however, the market has defied speculation breaking out of the long term sideways move and making a new all time high. So is this the start of the next bull-run or a false break out before a major pull back?

The big move up on the Dow Jones Index last week was triggered after the Fed Chairman, Jerome Powell, indicated that the US economy was still under threat from what he described as disappointing manufacturing activity, a tame inflation and a simmering trade war. So after much speculation that the Dow Jones Index was over heated and getting closer to a crash, it defied logic and moved up strongly to break above the previous all-time high set around 40 weeks ago in October 2018 to make a new all-time high.

While the market is moving up, we may see some volatility over the coming weeks as corporate earnings season is imminent. Analysts are very likely to be hanging out for these earnings figures, so that they can adjust portfolios for the second half of the year.

There is speculation that the analysts are expecting earnings for the second quarter to be down slightly. Given this, as long as there are no major surprises, it should be business as usual for the Dow Jones Index and the S&P 500. That said, if earnings come in worse than anticipated, I expect that stocks will be punished and the Dow Jones and S&P 500 may retreat. 

Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the award winning book Accelerate Your Wealth—It’s Your Money, Your Choice.

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