Even with modestly positive gross domestic product (GDP) numbers from the U.S. and U.K. and signs of economic stability in China, investor sentiment is going downward, because the appetite for risk is dwindling.
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New York, NY (PRWEB) October 30, 2012
Mitchell Clark, financial expert and contributor to Profit Confidential, reports that in September, consumer spending grew 0.8%, after an unrevised rate of 0.5% in August, and the figure beat consensus. But with Hurricane Sandy closing the stock market yesterday, Clark still thinks the near-term trend is lower. Clark points out that Hurricane Sandy couldn’t have come at a worse time for revenues and investor sentiment, as both continue to deteriorate.
Clark notes that investor sentiment is deteriorating because investors continue to be risk-averse, buying bonds instead of stocks.
“Even with modestly positive gross domestic product (GDP) numbers from the U.S. and U.K. and signs of economic stability in China, investor sentiment is going downward, because the appetite for risk is dwindling,” says Clark. “Oil at $88.00 a barrel says it all. Hurricane Sandy will no doubt keep oil prices down this week.”
According to Clark, price deterioration among blue chips has also been significant this month.
“Most blue chips have been deteriorating since the beginning of the month,” reports Clark. “The stock market is not expensively priced by any means, but revenue growth is deteriorating… Benchmark stocks like PepsiCo, McDonalds, and 3M have taken big price hits.”
In the article “Hurricane Sandy Halts Trading—But Not the Decline in Revenue Growth,” Clark notes that many blue chips remain very fairly priced in this market, and because of this, he can’t see the stock market crashing without some major catalyst.
Clark concludes by noting that his near-term outlook is for further decline in the major stock market indices, followed by consolidation. Fair valuations will keep the decline tempered.
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