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By Catholic Online (NEWS CONSORTIUM)

11/12/2013 (10 months ago)

Catholic Online (www.catholic.org)

However, the outlook for further gains under Obama is grimmer

The stock market is enjoying increased stimulus under President Barack Obama. Many analysts say that the economic outlook is considerable, considering that this is Obama\'s second term in office. However - there are growing indications that this may not last.

Re-elected Republicans have historically had a better stock-market performance, with an average five percent gain in the first year of their second terms compared with a 1.2 percent loss for Democrats, 2013 is on track for the best return in a decade.

Re-elected Republicans have historically had a better stock-market performance, with an average five percent gain in the first year of their second terms compared with a 1.2 percent loss for Democrats, 2013 is on track for the best return in a decade.

Highlights

By Catholic Online (NEWS CONSORTIUM)

Catholic Online (www.catholic.org)

11/12/2013 (10 months ago)

Published in Business & Economics

Keywords: Stock market, Standard & Poor, growth, Obamacare, NSA


LOS ANGELES, CA (Catholic Online) - "The president came in at a highly unusual time with markets in complete disarray," Chad Morganlander, a Florham Park, New Jersey-based portfolio manager at Stifel Nicolaus & Co. says. "After the rally this year, we're fairly valued at best. The next stage of this will have to be an improving economic outlook and earnings outlook well above where we stand."

The 24 percent jump in the Standard & Poor's 500 Index for 2012 is the third-biggest annual rally after a president was returned to office since the 1930s. According to data compiled by Bloomberg, recent figures trail behind both Bill Clinton and Ronald Reagan. The index has climbed 108 percent since Obama became president, adding more than $10 trillion in equity market value.

Adding to this is a record Federal Reserve stimulus, interest rates around zero percent and a doubling of corporate profits since they fell to a five-year low in 2008 helped sustain stock increases under Obama.

The rally that began just after he took office a second time now exceeds the average length of bull markets by almost a year. Valuations are up 18 percent in 2013.

However, add to that prospects for the Fed to curtail stimulus, threatening higher borrowing costs and the outlook for further gains under Obama is grimmer.

Re-elected Republicans have historically had a better stock-market performance, with an average five percent gain in the first year of their second terms compared with a 1.2 percent loss for Democrats, 2013 is on track for the best return in a decade.

It must be noted that the Obama administration is fighting an international backlash over revelations that the National Security Agency spied on foreign leaders, hacked into fiber-optic cables to get data from Google Inc. and Yahoo! Inc. and intercepted communications of Americans without warrants. The president is also defending his Affordable Care Act this after Web site glitches delayed thousands of people from signing up for the health-insurance exchanges.

"It's unusual that we've gone so long without at least a correction," Mark Luschini, chief investment strategist at Janney Montgomery Scott LLC, said from Philadelphia. "If you just look at this from a valuation perspective, the market is rich. That doesn't mean we have to crash, but it does suggest that going forward, your return assumptions for U.S. equities should be much more muted than they have been."

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