While U.S. stocks started off a new quarter, market analysts pointed to an uncertain economic climate in couching their predictions for how the market will perform for the remainder of the year. The fourth quarter is getting less bad and amrket needs to change to getting better. The uncertainty over the economic recovery means that the range in expectations is wide. That means that the range in which the market might trade is also wide. The recovery is starting to look more like stabilization and not a 'V' shaped recovery. According to me the second quarter, which had the S&P 500 rising 15% in striking its largest quarterly gain since 1998, was less impressive in terms of dividends. The current trend to conserve cash and cut dividends has become defensive, with even relatively healthy companies choosing to reduce payouts. Until we see the economy better, and not just for one quarter, many companies will remain gun shy about parting with their cash. The next test for dividends will come in August and September when companies start to review their 2010 budget and expenses. If they don't feel comfortable about a stronger 2010, we might be in for another round of cuts.
With 2009 at the halfway point, the S&P needs to advance 60% to break even for the decade.
Written By -With 2009 at the halfway point, the S&P needs to advance 60% to break even for the decade.
Shah Anaym Kabir, Financial Analyst, Dee Vere Private Equities, itrade-uk. Email- s.anaym@yahoo.com
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