The stock market is at a point where strong economic growth can hurt it. That’s because any resulting rate hikes from the Federal Reserve could lessen the appeal of equities versus bonds.
Goldman Sachs says that companies returning cash to shareholders tend to outperform during these periods of economic expansion.
The firm has identified 18 companies it expects to beat the broader market as gross domestic product increases.
A robust, growing economy doesn’t always mean a strong stock market.
Sure, an expanding economy is a crucial component of the profit growth that drives share prices higher. But at a certain point the Federal Reserve has to step in to make sure conditions don’t get overheated.
We’re at that point right now.
Investors increasingly having to contend with the fact that strong growth in economic indicators like gross domestic product (GDP) may wind up hurting equities, which are enjoying their longest bull market on record.
The reason is straightforward: The Fed will raise rates in order to keep the economy in check, and that will make stocks less attractive compared to their fixed-income counterparts.
So what’s a trader to do? Goldman Sachs recommends seeking …read more
Source:: Businessinsider – Finance