The stock market continues to impress with its bullish uptrend, which has been in place since the middle of last year. As of late, several of the major stock indexes have recorded impressive gains and the outlook appears favorable for sustained growth. Growth stocks, in particular, are leading the charge, though all markets are buoyed by a robust macroeconomic environment.
GDP growth appears squarely within the 2-3% range for most developed and many emerging economies, labour markets remain tight – with wages further increasing – and inflation remains in the desired range. The impact of the US-China trade dispute has mostly been absorbed by both economies, which have so far evaded the looming threat of a full-on recession.
These favourable fundamentals have most definitely been reflected in the performance of the US stock market. The S&P 500, the most prestigious of stock indexes, has gained more than 21% over the course of the last year, and it is currently flirting with all-time high levels. A similar pattern is visible among other major indexes, such as the Dow Jones Industrial Average and the Nasdaq Composite, which have similarly advanced more than 20% over the same period.
Growth stocks have also surprised with their resilience, as they still remain on top of the stock market in terms of gains. Traditionally, investors consider growth stocks to be more risky than their counter-part, value stocks, though they tend to offer steeper reward potential than other securities. In this case, risk-takers profited from the S&P 500’s 36% gain in the growth stocks segment throughout the course of last year.
The overall positive sentiment in the markets is inherited by most individual stocks as well. Across all sectors, doubledigit returns were not uncommon, and certain stand-out companies have made even bigger gains. Several healthcare stocks, such as UnitedHealth Group and Johnson & Johnson, have advanced more than 50% over the rough year that ended in December 2019.
Most analysts remain bullish about the stock market’s potential for the near future, although with a pinch of caution. The ongoing spread of the COVID-19 outrage continues to be monitored closely, both from a global health and an economic perspective. Either way, stock indexes appear to have started off a new decade in the best way possible, and that’s certainly a cause for optimism.