S&P 500 Outlook Remains Stable

Having begun last week at 2,006.10 the S&P 500 fell throughout the week and closed last Friday at 1,985.54. Concerns that the Federal Reserve will announce an increase in interest rates later this week led to investors selling stocks in an attempt to maximise profits.

Stocks had risen to new heights thanks to the Federal Reserve’s quantitative easing program and interest rates being close to zero for six years. However, increasing interest rates is likely to reduce investors’ optimism. On the other hand market watchers don’t expect a significant drop if increase rate hikes are announced this week.

As a result, while the following week may see further drops of the S&P 500, it is likely that it will return back to current levels within a few weeks, especially as US corporate earnings are expected to resume double-digit growth in the coming quarter.