“The Standard & Poor’s 500 Index hit yet another record high Monday, and some experts say conditions are ripe for the stock market to keep climbing.
The economy and earnings are growing, albeit at a modest pace; inflation is low; and in the wake of Washington’s budget/debt ceiling mess, the Federal Reserve isn’t about to tighten policy, the bulls tell The Wall Street Journal.
“This is the best environment for stocks right now. You don’t have rising interest rates becoming a problem. You don’t have inflationary pressures. You do have earnings growth,” Tim Hayes, chief global investment strategist at Ned Davis Research, tells the paper.
Even the 7.3 percent unemployment rate is a good thing, he says, because the rate is dropping.
When the unemployment rate is above 6 percent and decreasing, the S&P 500 averages annual gains of 16.5 percent, going back to the 1940s, Hayes explains.
Ned Davis Research says stocks also do better when earnings growth is under 5 percent….”
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