U.S. stocks are unlikely to see another down year even though the Fed is clearly not done raising rates just yet, says Ryan Detrick – Chief Market Strategist at Carson Group.
U.S. economy can avoid a recession
Year-to-date, the S&P 500 index is up more than 5.0%. Historically, Detrick noted this morning on CNBC’s “Worldwide Exchange”, that signals a strong year ahead.
So goes January, goes the year. When the year before is down and January’s up 5.0%, only happened five times, that full year has never been lower. So, we’re thinking it’s a new bull market, honestly.
More importantly, he has confidence in strength of the consumer and, therefore, does not expect the U.S. economy to slide into a recession this year, especially after the American Express CEO alluded to that last week.
What else could help boost stock prices?
Detrick is particularly bullish on cyclical value names in things like financials, industrials, and materials but is sticking to a more “neutral” stance on technology.
He expects the U.S. dollar to weaken this year, thereby unlocking continues upside for the equities market.
Historically, when the U.S. dollar is strong, things don’t do as well. Earnings aren’t so great because we’re dealing with a huge spike in dollar last year. If it continues to be weak, that can be a tailwind.
There’s a more than 98% probability that the U.S. central bank will switch to a narrower 25 basis points increase in interest rates this week – that’s according to the CME FedWatch Tool.
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