Will stocks Rally out in October 2022 ? This question must be in your mind, if you are investor in New York Stock Exchange.
STOCK MARKET PERFORMANCE
This week major index of New York Stock Exchange has closed below two years level. Dow Jones Industrial Average has closed at 28,725.51 on 30 September 2022, which is 2.29% ( Appx. 672 points ) below pre COVID 19 level.
Where as Nasdaq which closes at 10575.62 on 30 September 2022 is just 8.86% (Appx. 844 points ) above its pre COVID 19 level. Last two years was the years of tech stocks.
FACTORS RESPONSIBLE FOR POOR PERFORMANCE
Inflation
Last two years has been a tough time for world economy as a whole. In order to support citizens of country, every central bank has lowered the interest rates. Interest rates were kept low to maintain sufficient liquid money in economy. Which expanded credit into the system. Due to COVID 19 pandemic all over the world and supply chain disruption inflation started raising.
Due to 4 decade high inflation in United States economy Fed is tightening monetary policy. Fed has increased the rate by 75 basic points to control inflation.
Increasing inflation and reduction in capex by industries is further increasing inflation. It is expected that by 3rd quarter of 2023 inflation may come down to the targeted level of 2%.
Supply chain disruption since April 2022
Due to Russia Ukraine war in March 2022, supply chain of oil and other product is disrupted. Which added to still worsen the economic situation of united states and word economy. The impact of the same is observed in world stock markets.
Today many major index if world stock exchange are either 12 to 24 month lower. Bond yields has increased at higher level. This flow of dollars from stocks to bond resulted into fall in market.
Will the stocks Rally ?
The historic data support the rally of stocks in October, November and December month. The historic data of last 25 years show that in month of October 57% times the stocks has rallied. In month of November 63% times and in month of December 67% times the stock markets has rallied.
Considering the history there is high chance of stocks to Rally in month of October, November and December.
CONCULUSION
Share market historic data indicate that markets will rally in months of October, November and December. But share market is a risky asset investment. Before investing a proper analysis of stock is required in which you want to invest.
Since united state stock markets are its two year low, it can be taken as an investment opportunity into stock market. With the fall of the stock market the long term stock investment would be better option. But before investing into stock market one should be aware that in share market self analysis is must.
