Forecast: Dow Jones Industrial Average waits for interesting rally

Dow Jones Industrial Average will please investors in the near future

In brief: Dow Jones Industrial Average today fell, but in the long interval of time the index will be fortunate and growth - market analysts confident.

Predictions about the rising or falling Dow Jones Industrial Average are very vague and depend on many factors, anticipate these factors ahead of a very, very difficult, but possible. It is quite possible that the index Dow Jones Industrial Average set sights on a mark at 12 000 points by the end of the year and 13 000 points in 2011. The American stock market lies ahead rally. This opinion is shared by Peter Moric, a professor of business school named after Robert Smith at the University of Maryland and former chief economist of the International Trade Commission USA.

U.S. stock indexes over the past year have shown phenomenal growth despite periodic fall. What will happen next? And then everything will be fine! Despite the lengthy doubts about the effectiveness of programs to save Greece, the huge U.S. budget deficit and the financial incentives for the economy this year will be damn good, experts say. The U.S. economy is gradually recovering. U.S. GDP increased in January-March this year at 3.2%. Growth in the fourth quarter of 2009 amounted to 5,6%, while the third – 2,2%. Such a sustained increase in GDP to suppress the fear that the economic crisis has not ended completely. The main reason was to restore growth in consumer demand. Consumer spending rose in the first quarter to 3,6% in annual terms, after rising by 1.6% over the previous three months. Economists are hoping for continued growth in consumer spending, but Americans are still reluctant to spend money, especially given the slow growth of the labor market and personal income. Increased spending of the population now occurs mainly at the expense of consumer durables such as cars. In addition, the contribution to GDP growth the U.S. had the increased exports and investment of non-residents in the U.S. economy. Purchasing companies hardware and software, for example, grew up in the first quarter to 13,4% in annual terms, after 19% increase in the last quarter of 2009. All this combined with a more confident economic growth in the Asian region will benefit the American multinational. Companies in the S & P 500, half the profits obtained abroad. The fastest growth observed in China, where U.S. companies are very successful position. Reports 77% of companies the S & P 500 for the first quarter exceeded analysts’ expectations. Add to this low level of inflation and ultra-low interest rates, which will remain in that position until 2011. Rumor has it that the Fed pumping the economy with liquidity and spur inflation, but consumer prices and, to a lesser extent, the prices of petroleum products, characterized by remarkable stability. In the summer season is expected to drop in gasoline prices. The Fed can concentrate on the problem of unemployment and wait until next year or even longer before taking action to stabilize prices. The labor market in the U.S. only recently began showing signs of recovery. Most likely, interest rates remain near zero until 2011 Meanwhile, foreign investors purchased U.S. dollar as a safe haven that will keep long rates on U.S. securities at a low level until early next year. Resumed the demand for corporate bonds, and investors will be satisfied with lower risk premia on long-term bonds than in 2009, thanks to all the above, the private American capital will return to local equity market.

Due to the fact that Chinese and other Asian stocks, as well as real estate markets in these countries is questionable, a good investment will be treated as shares of companies that use the economic growth of the Asian region and are resistant to the effects of the vagaries and errors of the capitalist system in China or other countries in under state control. It is worth noting that last year was lost to the Chinese stock market. Investors experienced a bubble in real estate market, the strengthening of the yuan and a possible slowdown in economic development. The main Chinese Shanghai Composite Index fell almost to its lowest level reached by 27 March 2009 and almost wiped out the effect of the restoration. This year, his fall was 19%, and after reaching a peak in August last year, he sank 24%. On the other hand, the data suggest that at the moment, China’s economy is at its peak growth. In the first quarter annual economic growth of China amounted to 11,9%. Chinese stock market was the first of the major sites, who recovered from the financial crisis, when in October 2008 under a felt bottom. Most other markets have reached bottom in March 2009. Against this background, U.S. companies with significant market share in China and other Asian countries, will be attractive investment targets for foreign investors.

Resumed growth in production. Industrial companies have learned to do fewer workers. This should lead to an increase in their profits. Like it or not, but Obama has yet ventured to reform the health system, and now the situation around the pharmaceutical and insurance companies, as well as manufacturers of medical equipment to a large extent cleared. The introduction of a large number of innovative technologies is observed in the pharmaceutical and automotive industries, microelectronics, production materials and consumer goods.No matter how journalists tried to bury such technological giants as Intel, Apple, GE, they remain the leading players in the market. Ford is a role model when it comes to restoring industrial production, but GM is going to increase market share without using the popular price schemes stimulate demand. Market Intellectual Property U.S. continues to grow. Due to this significantly increases the cost of many American companies. Market housing stabilizes. Market non-bank financial service provider feels even better.

Pavel Migin
2010-05-13 21:00, Economics.

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