Tags: economy | stock | market | uncertainty

Uncertainty Reigns in Stock Market

By    |   Tuesday, 01 April 2014 12:14 PM

With the economy stumbling a bit during the winter and stock valuations at lofty levels after the market's torrid rally last year, uncertainty ruled the equity market in the first quarter. And that trend may continue.

The Standard & Poor's 500 Index gained 1.3 percent in the first three months of the year.

"It rarely pays to make big changes to a portfolio in this kind of an environment," Rebecca Patterson, chief investment officer at Bessemer Trust, told The Wall Street Journal. "Nothing has happened to change people's views in a material way. It's all been at the margins."

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Bessemer remains optimistic about stocks. "But the conviction has been damped a bit" until statistics clearly show a pickup in economic growth, Patterson said.

As for valuations, the S&P 500 is trading at 15.2 times estimated earnings for the next 12 months, according to FactSet, The Journal reported. That's up from an average of 13.8 during the last decade.

Given current valuations, "I'm happy to see the market digesting a little bit," Neil Hokanson, president of financial advisory firm Hokanson Associates, told The Journal.

"A sideways market allows earnings to catch up…and sets us up for a good rise" later this year, he said.

Some investors see room for bullishness based on strength in several recent economic statistics, such as the March gain in the Institute for Supply Management’s manufacturing index.

"People are looking for confirmation that the weakness we saw earlier in the year was, in fact, weather-related,” Walter Todd, chief investment officer of Greenwood Capital Associates, told Bloomberg.

"Seeing better data confirms that it was a temporary slowdown in the economy, and we should see a pickup."

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InvestingAnalysis
With the economy stumbling a bit during the winter and stock valuations at lofty levels after the market's torrid rally last year, uncertainty ruled the equity market in the first quarter. And that trend may continue.
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2014-14-01
Tuesday, 01 April 2014 12:14 PM
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