Stock markets in the U.S. have continued to defy the laws of gravity with a steady upward price movement during 2015. Looking at the year-to- date Index performance of several of the major U.S. indices bears this out.
According to investment management firm, T. Rowe Price, for the period January 2015 to end May 2015, the Dow Jones Industrial Average (DJIA) increased by 2.14 %, the S&P 500 index (SPX) by 3.23% and the Nasdaq Composite (COMP) by a very respectable 7.05%.
While the market index growth for May was less than 2% in most cases, the low price volatility on the markets should be reassuring for investors that current values will be maintained.
Despite some pessimism, and there are always those for whom the glass is half empty, an objective look at the economic fundamentals in the U.S., however, shows a moderate but steady recovery, with both consumers and business economically healthy. A look at some of the economic numbers bears evidence of the encouraging signs for the future of the U.S. markets.
Goldman Sachs has recently revised its 2015 full year forecast to anticipate a 3% growth in GDP. The World Bank revised its forecast slightly downward, but still sees a growth of 2.7% for the year. These figures might not be earth shattering, but they certainly indicate confidence in a continued steady growth of the U.S. economy.
Recently released figures of retail spending for the three months ended May also showed continual gains, particularly in the automotive sector, despite an increase in fuel prices. The government's recent announcement that 280,000 new jobs were created in May means that consumers will have more to spend which should see retail sales figures maintaining their continued growth.
The May report of the NFIB Small Business Survey shows an increase in small business optimism of 1.4 points to 98.3. These figures were fuelled by positive sales trends followed by improved forecast and actual profits. This in turns bodes well for the large corporations that survive off small business.
The continued recovery in home prices has been estimated at 5% by real estate data firm FNC as well as by Case-Shiller data. The increase in building permits issued in May to 1.275 million, which shows growth on the April figure of 1.140 million new permits, confirms the continued growth in the real estate sector of the economy.
Taking all these factors into account, there should be no reason for market investors to fear a market correction in the near future. Despite all the positives, investors are always advised to continually analyze and to think critically about their investments.