Stock Market Review 08/26/2019

Alex Ralicki |

The long-running bull market has been historic, having taken the Dow Jones Industrial Average from just above 6,000 a decade ago to just over 27,000 earlier this year. This long, unprecedented forward march has been underpinned by steady economic growth, subdued inflation, low-interest rates, and generally supportive corporate earnings. That is a tough combination to beat. Moreover, with the outlook still reasonable on most fronts (i.e., with inflation likely to remain low, the Fed seemingly poised to reduce already low-interest rates still further, and earnings poised to continue outdistancing expectations), we think this relatively reasonable P/E market should continue to roll forward.

Of course, all is not completely well; it rarely is. For example, there is no shortage of uncertainty globally, particularly on matters of trade. Also, there is the business slowdown that is taking place in China and across parts of Europe. Finally, there is the sharp drop in interest rates on our shores, where the latter could be flashing warning signs on growth. Assuming that these headwinds do not intensify significantly, and the supportive fundamentals stay in place, we could see further gains on Wall Street.

Conclusion: In sum, we believe investors should focus on the healthy fundamentals now in place and the decent long-term outlook, and look beyond the short-term upheavals that can affect day-to-day trading.