Market Overview

Long-Running Bull Market With 'Compelling' Fundamentals Unlikely To Slip, Says Argus Analyst

Share:
Long-Running Bull Market With 'Compelling' Fundamentals Unlikely To Slip, Says Argus Analyst
Related SPY
President Trump Cancels Summit With Kim Jong Un
The Market In 5 Minutes: GE, Tariffs, Summit, Jobless Claims And More
Watching Out For Risk (Seeking Alpha)
Related DIA
President Trump Cancels Summit With Kim Jong Un
A Peek Into The Markets: US Stock Futures Down Ahead Of Economic Data
Watching Out For Risk (Seeking Alpha)

Market participants were beginning to feel uncomfortable with the extended rally that was ongoing since the end of the bear market in March 2009. When the major market gauges reversed course in late January, it didn't come as a surprise.

Despite the recent sell-off, which intensified Feb. 5, Argus analyst Jim Kelleher said he sees no signs that that the long-running bull market is at risk of falling into a bear market, as economic and earnings fundamentals remain compelling.

The market is experiencing its first meaningful sell-off since the twin corrections around Brexit and the U.S. prior to the presidential election. Ahead of this, the S&P 500 Index sold off by 11.2 percent from December 2015 to February 2016 amid a trough in energy prices.

A rise in bond yields, which could be interpreted as a "preemptive strike" against inflation; slackening consumer spending; and lukewarm performance in the housing and automotive sectors could be causes of the sell-off, Kelleher said. 

The main driver, though, could be profit-taking after a strong 2017 and a solid start to 2018, the analyst said. Corrections, though in bad taste, are a necessary evil that keep the market mechanism functioning smoothly, Kelleher said. 

Notwithstanding the setback witnessed by the stock market, Argus continues to see good value in U.S. stocks.

"We also favor risk-on and economically sensitive stocks with good growth prospects over defensive and income-oriented names that actually offer limited defense in an environment of rising interest rates," the analyst said. 

Related Links:

Correction Territory: Putting It Into Perspective

How Animal Spirits Will Affect The Market In 2017

Posted-In: Argus Jim KelleherAnalyst Color Markets Analyst Ratings Best of Benzinga

 

Related Articles (DIA + SPY)

View Comments and Join the Discussion!