A strategist from the Bank of America has identified September, October and November as crucial months for this market cycle. According to the US stock market forecast for the third and fourth quarter of 2010, it could go two ways“either into a double dip, or a new cycle of expansion will begin.
Sam Stovall, a chief investment strategist at Standard & Poor's Equity Research, said in a market report released last week that in the meantime it is too early to tell if the correction has run its course or not. "History tells us not to get our hopes up as the market's average performance in August has underperformed the average for all months since 1945, and September's return has been the worst for the market since 1928."
This would mean that the next few months could be a repeat of the last three, in which we have seen continued pressure on stocks due to slow consumer spending, the falling housing market, the stricter regulation of banks and other businesses in the financial services market, and the reduction of federal efforts to stimulate the economy.
S&P's Investment Policy Committee lowered its recommended exposure to U.S. stocks from 45% to 40% of the total portfolio. In addition, it raised its bond allocation from 25% to 30%.
However, although the market report by S&P said that the market is likely to remain weak into the fall months, as part of its US stock market forecast for the third and fourth quarter of 2010 it also highlighted that there could be a potential bottom in September or October. After this bottom has been reached, things could start to look a lot rosier for market investors.
These market forecasts come after a ruthless three months for investors in U.S stock funds. April, May and June were very poor months. June came close to it. The benchmark Standard & Poor's 500-stock index plunged 11.4% in the quarter, including reinvested dividends. The concentrated Dow Jones Industrial Average fell 9.4%, also including dividends.
According to market reports, all in all, U.S. stock fund shareholders suffered their worst quarterly loss since December 2008 in this three month stretch. In the same time period, the average domestic stock fund plunged 10.7%, according to data supplied by the investment researcher Morningstar Inc.
Taken together, the three-month stretch slammed U.S. stock fund shareholders with their worst quarterly loss since December 2008. The average domestic stock fund plunged 10.7% in the period up to June 30, according to data from the investment researcher Morningstar Inc.
Beside this, there were some successes in the second quarter. The most lucrative places for stock-fund money in April, May and June were precious metals funds, which gained 10.7%, and bear-market funds, which were up 9.4%.
Highlights among precious metal funds were the American Century Global Gold Fund, which grew by 16.9% in the quarter, and by 14.1% in the first six months of the year. Among the exchange-traded funds, Market Vectors Gold Miners ETF grew by 17% and was up 12.4% for the year. SPDR Gold Shares grew by 11.7% in the quarter, and by 13.4% the first six months of the year.
This next few months will undoubtedly be a very nervous one for investors, but if the more positive US stock market forecast for the third and fourth quarter of 2010 does turn out to be the correct one, and the bottom is reached in late summer and a new cycle of expansion does begin, then the second half of 2010 should be more enjoyable than the disastrous second quarter that has just come to an end.
These market forecasts come after a ruthless three months for investors in U.S stock funds. April, May and June were very poor months. June came close to it. The benchmark Standard & Poor's 500-stock index plunged 11.4% in the quarter, including reinvested dividends. The concentrated Dow Jones Industrial Average fell 9.4%, also including dividends.
According to market reports, all in all, U.S. stock fund shareholders suffered their worst quarterly loss since December 2008 in this three month stretch. In the same time period, the average domestic stock fund plunged 10.7%, according to data supplied by the investment researcher Morningstar Inc.
Taken together, the three-month stretch slammed U.S. stock fund shareholders with their worst quarterly loss since December 2008. The average domestic stock fund plunged 10.7% in the period up to June 30, according to data from the investment researcher Morningstar Inc.
Beside this, there were some successes in the second quarter. The most lucrative places for stock-fund money in April, May and June were precious metals funds, which gained 10.7%, and bear-market funds, which were up 9.4%.
Highlights among precious metal funds were the American Century Global Gold Fund, which grew by 16.9% in the quarter, and by 14.1% in the first six months of the year. Among the exchange-traded funds, Market Vectors Gold Miners ETF grew by 17% and was up 12.4% for the year. SPDR Gold Shares grew by 11.7% in the quarter, and by 13.4% the first six months of the year.
This next few months will undoubtedly be a very nervous one for investors, but if the more positive US stock market forecast for the third and fourth quarter of 2010 does turn out to be the correct one, and the bottom is reached in late summer and a new cycle of expansion does begin, then the second half of 2010 should be more enjoyable than the disastrous second quarter that has just come to an end.