If you aspire to attain portfolio diversification, you might have set your eyes on the US stock market. The US market trends and forecasts have fluctuated immensely over the last half year. For instance, the collapse of notable banking giants like the Silicon Valley Bank has affected the stocks of the banking sector.
Does that mean it's the wrong time to invest in the US stock market? Read on as we discuss the latest happenings surrounding the space and help you gain an overview.
While the S&P index witnessed a sharp decline in the month of March, it stabilised soon after. The fear of a domino effect taking down the banking sector was imminent. Thankfully, the initial days of April displayed solid signs of recovery and promised to put the market on track.
Going forward, here are some notable US market trends that can influence your investing decisions.
The United States is believed to experience a period of recession in the second half of 2023. However, the Federal Government is raking up measures to safeguard the US economy and avoid the descent into recession. The next few months will be crucial to determine if the American economy falls prey to inflated prices and high unemployment rates.
Undoubtedly, the recession will increase negative sentiments among investors and compel them to pull their investments in large numbers. Hence, the stock market will be synonymous with providing negative returns for a while before returning to its original position.
Keep a look out for the US economy before making your investment!
In a bid to avoid recession, the Federal Government has been tightening the monetary policy and increasing interest rates. The cost of borrowing for corporates and citizens has shot up, affecting corporate earnings and leaving fewer disposable incomes for people to invest.
Unfortunately, there is no clarity on when the interest rates will return to their earlier values. At the same time, the US market trend today also points to a shift from interest rate hikes to interest rate cuts in the upcoming months that could largely benefit the stock market, leading to a significant increase in the S&P index.
While the increase in value stocks has been ongoing since the end of 2022, investors haven’t been able to capitalise on this growth. The primary reason for this is the magnetism of uber-growth stocks, boasting a promising return for investors in the US market.
But the value sector stocks of industries focusing on energy, materials and financials are believed to be in the early stages of significant growth. They stand at the threshold of underperforming stocks that might appreciate in value over the coming months.
The US investor sentiment has consistently favoured large tech stocks, notably the FAANG companies. But with several big names in the tech industry depreciating in value, it might be time to look at some small companies with promising long-term returns.
You are aware of the volatility of the US market in 2023, a trend that might continue until the last months of 2023. As such, it is the perfect time to scout the market for low-value tech companies specialising in upcoming fields like cybersecurity, AI and the metaverse.
When you invest in the US market, you safeguard yourself against inflation in the Indian market. Diversification is a core component in preserving wealth and not succumbing to the whims of a single market. So, how can you start investing in US stocks?
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The value stocks in the US stock market look promising in 2023, with several industries specialising in energy, materials and financials leading the charge.
If you are taking your first steps into the US stock market, you can start with safer companies like:
