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The US markets were up last week with the S&P 500 ending at a 5 year high. Tuesday of last week marked the beginning of 2012 Q4 earnings reporting season and so far the results have been mostly better-than-expected.
Analysts are not finding consensus in what the 2012 Q4 earnings reporting season will look like. Therefore, investors will be closely monitoring corporate earnings to see what the trend could be as we head into 2013. Some analysts believe that US economic activity will be stagnant as we head into the New Year while others believe we could see another strong year of growth.
So far the stock market has experienced a solid New Year’s rally with the Dow Jones up about 3% in the first 2 weeks of the year. According to Bank of America, over $22 billion has moved into stocks since the beginning of 2013 which is the 2nd highest movement on record in the first 2 weeks of any year.
All eyes will be on Congress and the President as we get closer to February 28th, 2013. As part of the fiscal cliff avoidance legislation (AKA: American Taxpayer Relief Act of 2012), the automatic sequestrations (across the board spending cuts) were postponed for 2 months (until 2/28/13). Therefore, Congress and the President will be “duking it out” in DC over what spending cuts should be made and how high the debt ceiling should be raised. The rating agency, Moody’s, will be watching this process closely as they have warned of a possible US debt downgrade in the event our elected officials cannot come up with a viable bi-partisan agreement and if spending cuts are not large enough to avoid continuous debt growth.
This is for illustrative purposes only and is not indicative of any investments. Investment value will fluctuate with market conditions. Past performance is no guarantee of future results.
(Sources: www.bloomberg.com, www.wsj.com, www.economy.com, www.ltam.com)
