Why has USA Index Outperforming Its Peers?

The USA market has been outperforming its peers since the Global Financial Crisis. Finance and Business News Channels in the USA, are claiming that the current market trend is a 41 month old bull market, and that it should go into a correction by September. One wonders if it is a bull market or a recovery?

Globally, analysts around the world have been so bearish and financial firms such Macquarie Bank, Bank of America and Deutsche Bank and most financial institutions have been struggling with their equity trading arms. In the Euro zone, besides the financial crisis, the German DAX has in fact keep up with the Dow Jones and the S&P indexes.

What is a Bull Market?

Bull markets are when investor’s confidence, optimism and expectations are high. Investors expect big dividends in return for their money along with consistent capital growth.

The Charts

In the USA, the markets have been propped up by companies such Amazon, Apple, Ebay and Mcdonalds until recently. All related to the staple consumer industry. The rest, such as mining, manufacturing, utilities, etc have been struggling. In most cases these shares have drop considerably in value.

The Dow Jones and the S&P charts are definitely showing a long bullish trend. But can’t it be defined as a bull market, when in reality only part of the market has shown such a positive up trend.

Such increases in value of the USA indices has been thanks to the stimulus and monetary easing that supported their economy. Other countries have been sluggish to act quickly and have left their economies at mercy of the markets.

What about in the second half?

Wall street is about to reach, again, its highest level for the year – around $13,300 – but it is still short of the pre-global financial crisis all time high so there is definitively room to move. All it takes is another round of stimulus and a European plan which solves their fiscal crisis.

It is still possible that some stocks in the American indices drop in value and have their own correction, which will affect the overall index, but market sentiment has not picked up on it yet. If confidence returns we might have a bull market.

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