After a long six-year bull-run of the markets, investors and analysts of stock markets in United States have become dismissive about short term gains. Public sentiment about stocks markets has been falling rapidly since Chairman Paul Volcker of Federal Reserve began pushing interest rates upwards towards end of 1980. Skepticism has been ruling the investor sentiment as corporate profits are showing a decline amid news of China’s economic problems; plunge in oil prices and commodities. All these economic upheavals are also now affecting pessimistic sentient of Federal Reserve about slow growth in global economy.
Confusion and nervousness are common market sentiments
Investors today are nervous about sustainability of any rally in stock markets due to the constant economic problems around the world. Asset management firms state that investors have taken every rally as a chance to sell out their stocks and exit the market, so today there are more buyers than sellers. Every international level disaster, since the financial meltdown of 2009, like Ebola scare, fall in oil prices, Middle East crisis and the latest Chinese devaluation of currency have all created a sense of distrust about strength of global economy.
The pessimistic sentiment is prevalent in futures market too and bearish contractors for S&P's 500 are above bullish ones. Most of the trading that is being done is within the technology market which is the only sector showing signs of growth. The S&P index for futures market witnessed a rally of 10 percent during early part of 2015. According to details of recent data compiled by Commodity Futures Trading Commission, the number of short position speculators in recent years has increased.
When Federal Reserve started to ease interest rates, stocks went on a rally for five continuous years so when there was a decline during mid-year, it refused to increase rates again and stated that global factors will be able to curb inflation. But this activity has not curbed investor pessimism as market bears refuse to see actual growth of US economy.
Though issues like falling oil prices, increase in dollar prices and slowdown in Chinese economy are ruling international stock markets, the unemployment rate in United States has decreased to a dramatic level in past seven years while automobile and retail sales are showing significant growth. The growth in US economy can help in alleviating the stock markets too as slowdown in international markets in Asia and Europe are not likely to affect local economy.