PART 2 OF 2017 UNLIKELY TO LIVE UP TO EARLY STOCK HIGHS
Investors jazzed up by the sizable swelling of their 401( k) balances in the first half of the year might want to lower their expectations for the rest of 2017.
Stocks rose sharply in the first six months of 2017 as the broad market rose 8%, outstripping the return most Wall Street strategists predicted for the
full year and doubling the average 4% January- June gain since World War II, according to research firm CFRA.
But the best days for the stock market this year may already have occurred, many Wall Street pros say.
Gains could be capped by a market that’s gotten too expensive, political gridlock, an economy not growing fast enough and fears that top- performing tech stocks will cool off. Thursday, tech took a beating as the Nasdaq composite tumbled 1.4% and investors feared share prices in the industry had grown too pricey compared with earnings.
“It’s hard to imagine the second half being as good as the first,” says Bill Stone, global chief investment strategist at PNC Asset Management.
And the start of the year was very good. The Dow Jones industrial average topped 20,000 for the first time and made 22 record highs. U. S. companies posted their best quarterly profit growth in six years. Electriccar maker Tesla eclipsed GM as the nation’s most valuable auto company.
Tech stocks have shone the brightest. The Nasdaq — powered by 25% to 30%plus gains from tech giants such as Apple and Facebook — surpassed the 6,000 milestone. Amazon and Google parent Alphabet joined the “$ 1,000 Stock Club,” only to end the quarter a bit short of the mark.
Gains of that size aren’t likely to persist, analysts say. It’s possible prices will be lower by year’s end than they are now. The most bullish Wall Street strategist believes the market can climb 7.3%. The least optimistic prognosticator sees the market falling 6.1% from here.
Investors might benefit from investing some 401( k) money overseas. Investment opportunities may be better in foreign stock markets.