U.S. markets are venturing into unchartered territory this summer. Uncertainty surrounding the Greek debt deal, an imminent interest rate increase and overvalued healthcare companies are causing some investors to question the safety of the times ahead.
US investors rest after global markets soar higher
The Wall Street Journal reported that the U.S. stock market moved very little on Tuesday, compared to the previous day, when news regarding Greece’s bailout deal with creditors carried global markets higher. On Monday, positive performance in the global markets helped bring the Nasdaq to a record close. The latest activity, however, saw the Dow Jones Industrial Average climb 19 points, and the S&P 500 and Nasdaq composite indexes edge down slightly. It seems that the market is now resting from previous activity.
Optimism surrounding a potential Greek debt deal
According to USA Today, eurozone leaders said an offer by Greece might help break the four-month stalemate with international creditors that could lead to Greece exiting out of the euro currency. While the two sides failed to reach an agreement for new loans, and cash reserves are running low, some believe this situation will find resolution.
The Wall Street Journal pointed out that European markets climbed on the hope that a deal would be reached, in order to avoid Greece’s bankruptcy. On Tuesday, European Commissioner for economic and financial affairs Pierre Moscovici told French radio that the world might see a deal transpire this week. Many investors hope that Greece will find a solution to its debt problem and avoid exiting the eurozone and disrupting financial markets across the region. David Lafferty, chief market strategist at Natixis Global Asset Management, explained that hope has not yet died out.
“The optimism we had yesterday on hopes of a Greek deal appears to be carrying over,” said Lafferty, according to the news source.
US markets may not move significantly this summer
U.S. stocks had a strong second quarter, with the S&P 500 up by 2.7 percent. While some investors question whether the market will break free of its limited trading range so far, the market is up in 2015 – although only half as much as 2014 for the same period. Andrew Slimmon, managing director at Morgan Stanley, explained that the market may not see strong performance at all this summer, regardless of the Greece debt deal, reported The Wall Street Journal.
“If we have a Greek agreement we could have a continued bounce, but I think once again the market will run out of steam,” said Slimmon, according to the news source. “Historically the market doesn’t make a lot of headway in the summer and I don’t see why it would be any different this year.”
Are health care companies overvalued?
Slimmon also mentioned worries over health care company performance. U.S stocks have pushed higher recently, mainly on the back of healthcare and financial company performance, which some investors say may be overvalued. As a group, health care has risen more than any other sector in the S&P 500, although talk of mergers and acquisitions could be responsible for the appreciation in share values, noted The WSJ.
“Health care is a very fertile ground for stock-picking,” said Slimmon, according to the news source. “Yes, there are a number of biotech stocks that don’t have a lot of earnings that are obviously expensive…”
With the Fed expected to raise rates soon, it seems that this summer, the stock market and fixed income markets are headed toward uncertain times. During these uncertain times, investors should make sure they have access to the latest financial information available. One way to do this is to harness the power of eSignal 12.2 trading software. Leveraging sophisticated solutions that offer real-time market data, as well as insight into global news, is one sure way to stay ahead of the curve.
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