My 3 Biggest Predictions for the Stock Market in March
The stock market pulled back from all-time highs in the last few weeks of February, and we are entering a period likely to be dictated by a handful of prominent economic factors. Equity performance in March will come down to the combination of economic recovery, corporate earnings results, Federal Reserve policy, and inflation expectations.
Equity markets are being supported by a few important factors. Accommodative monetary policy is keeping interest rates low, supporting economic expansion and increasing the potential for inflation. All of these conditions stimulate stock prices. Economists, institutional investors, and many members of the general public are confident that falling coronavirus cases will lead to widespread economic recovery this year, with strong growth around the globe. Corporate earnings for the fourth quarter have mostly shown improvements in sales and profits as well.
The resulting optimism, combined with the impacts of Federal Reserve bond purchasing, has led to low cash balances in institutional and hedge fund portfolios. Asset managers love growth assets right now, supporting today's historically high equity valuations.
Source Fool.com
