The Correction Begins?
After hitting a high two weeks ago, the US stock market (S&P 500) has experienced a mini downward correction of 3%. There seems to be very little incentive to be aggressive buyers of US stocks at this juncture. While the hope for better economic growth may drive stock prices higher, the concern that our Federal Reserve will begin tapering its easy money policies will tend to keep stock buyers from taking on more risk. Hence a further correction may be in the cards for the near term.
In addition, there are some warning signs to heed. Macy’s, Walmart, and other major retailers have reported unexpected drops in retail sales for the 2nd quarter. Since the US consumer is nearly 70% of the US economy, any tightening on their part is not good news. If this factor persists into the next quarters, the US stock market will likely correct more. Should this occur, it will become an excellent opportunity to add to your stock portfolios. In the near term investors should hold their current portfolios and wait to add to their stock positions until lower prices present better values.
As for our FunStocksIndex, those 15 stocks are showing stronger positive trends after reporting – on the whole – better than expected sales and profits. It appears that while the US consumer is buying less clothes and other personal items, the global consumer is not holding back on their spending for “fun times,” travel, or entertainment.