Blue Royal Investments reports on 5 reasons why stocks will go up in the third quarter

London, UK — It’s no secret that the stock market has been on a roller coaster ride this year. After hitting all-time highs in February, stocks took a sharp plunge in March as the coronavirus pandemic spread across the globe. However, since bottoming out in late March, stocks have staged an impressive rebound, with the major indexes now hovering near their pre-pandemic levels. Blue Royal Investments broker Dominic Griffin lays down the fundamental reasons why stocks are predicted to go up in the third quarter.

Many experts believe that the stock market will continue to move higher in the third quarter. One reason for this optimism is that many companies are starting to see their businesses rebound as economies around the world begin to reopen. Additionally, many companies have cut costs and taken other measures to weather the storm, which should help them to post strong profits in the coming months. Finally, interest rates are expected to remain low, which should provide a tailwind for stocks. So, if you’re thinking about getting back into the market, the third quarter could be a good time to do so.

Economic Analysis

Looking at the current market data and economist predictions, it is safe to say that stocks will go up in the third quarter. One main reason is that the Federal Reserve has announced they will be keeping interest rates low until inflation meets their target rate. This is good news for businesses as they can borrow money for cheap and use it for expansion and hiring.

Business Expansion

As businesses expand, this creates more jobs which in turn boosts consumer confidence and spending. All of this increased economic activity fuels even more growth, creating a virtuous cycle that drives stock prices up. Another reason stocks will continue to rise is due to the ongoing recovery from the pandemic. Although there are still some risks, overall things are looking better than they were a few months ago and this improvement is reflected in stock prices.

The economy is improving

After a rough start to the year, the economy appears to be picking up steam. GDP growth was positive in the second quarter, and several key indicators suggest that the momentum will carry into the third quarter. That’s good news for stocks, which tend to do well when the economy is growing.

Earnings are on the rebound

One of the key drivers of stock prices is earnings growth, and it looks like earnings are poised for a strong rebound in the third quarter. Analysts are expecting double-digit earnings growth for many companies, which should provide a boost to stock prices.

Valuations are still attractive

While it’s true that stock prices have risen sharply in recent months, it’s important to keep things in perspective since early 2022 was very bad for stock indexes like NASDAQ and S&P 500. When you compare stock prices to earnings, for example, stocks are still relatively cheap by historical standards. That means there’s still room for stocks to move higher even as growth picks up. But with valuations still attractive, there are good reasons to believe that stocks will continue to outperform in the months and years ahead.

Interest rates are low

Low-interest rates are another tailwind for stocks, as they make it cheaper for companies to borrow money and expand their businesses. With rates expected to stay low for the foreseeable future, stocks should continue to benefit.

The Fed is still supportive

The Federal Reserve has been very supportive of the stock market this year. The Fed has lowered interest rates three times this year to keep the economy growing. This has helped to boost the stock market, which has harmed inflation. The Fed is unlikely to change its policy shortly, as it is committed to supporting the stock market. Inflation has been a concern for the Fed this year, but it is not expected to have a significant impact on the markets. The Fed is expected to keep interest rates low to support the economy.

Closing argument

Many companies have reported strong earnings so far this year despite the challenges posed by the pandemic. This bodes well for the future as companies are positioned to continue growing even as we move past the current crisis. Consequently, there are a variety of reasons why stocks are likely to rise in the third quarter from an economic perspective which is why investment firms have laid out plans for traders on how to counter the negative impact of early 2022 by the end of the 2nd quarter.

Disclaimer: Our content is intended to be used for informational purposes only. It is very important to do your research before making any investment based on your circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on this article and wish to rely upon, whether to make an investment decision or otherwise.

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