Equities Roundup: Outlook for Profits May Be Cloudy, But Abandoning Stocks? That’s So 1979

Equities Roundup: Outlook for Profits May Be Cloudy, But Abandoning Stocks? That’s So 1979

by David Larrabee, CFA

Global equity markets posted solid, and in some cases spectacular, gains in the first quarter of 2012. In Asia, Japan’s Nikkei Index ended the quarter up 19.3%, Hong Kong’s Hang Seng Index was up 11.5%, and the Shanghai Composite Index was up 2.9%. Europe, as represented by the STOXX Europe 600 Index, gained 7.7%. And in the United States, the S&P 500 Index posted its best opening quarter in 14 years, advancing by 12.0%.

Investor euphoria was short-lived, however, as focus in recent weeks has turned to renewed fears about the sovereign debt crisis in Europe, with Spain and Italy now taking center stage. And in the United States, the Federal Reserve has indicated that further quantitative easing (jet fuel for equity markets) may not be necessary. Compounding the macro concerns is growing angst over the direction of corporate profits. As a result, market bulls have pulled in their horns, suggesting that the old adage “Sell in May and go away” may hold true for 2012.

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David Larrabee, CFA | April 19, 2012 at 2:30 pm | Tags: equities, Facebook, Google, profit margins, social media | Categories: Equity Investments | URL: http://wp.me/p1SgTN-Io

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