After a multi-year rally, the bull market is growing long in the tooth and beginning to slow down, but stocks can still slowly push higher. In a slow growth environment, investors should consider dividend exchange traded funds that can pay you along the way.
“All in all, I see a market that is supported by slightly better fundamentals but is held back by structural forces,” Jurrien Timmer, Director of Global Macro at Fidelity Global Asset Allocation Division, said in a research note. “My sense is that the new highs are justified, but that stocks will only grind higher for now, as opposed to an explosive move to the upside.”
U.S. markets have slowed down and have been stuck in sideways trading in recent weeks. Looking ahead, we may expect more of the same as slow growth and low inflation will continue to weigh on the economy.[related_stories]
The U.S. economy continues to plug along as full unemployment and robust consumption maintains forward momentum. However, an aging population, excessive debt and stagnant productivity growth have muted any upside gains. Consequently, nominal U.S. gross domestic product is moving along at a 2% to 3% pace while both real GDP and inflation are rising at an annualized 1% to 2% rate.
Moreover, the U.S. economy is strong enough to the point that the Federal Reserve may tighten its monetary policy but slow enough that the Fed may refrain from overtightening.