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US stock market 2015 review: Dynamics of the stock market in 2015.

US Stock Market 2015

During the year, the stock market was in a state of overheating. Namely, the growth that began in 2009, stopped under the curtain of 2014 on the gap between 2050 and 2060 points, and throughout 2015 the market literally remained at this level. The only considerable changes were increased fluctuations, which became visible by the end of the period.

Accompanied by numerous fundamental shocks, the stock market weakened in his growth. However, the catastrophic fall didn’t occur, that is, in general, can be easily explained by the fact that investors were in no hurry to leave the market immediately in panic, as it was in 2008-2009. Despite the negative news background coming from Europe and Asia, the market was stable throughout the year due to stabile economic indicators and some news speculations conducted by the Federal reserve system of the USA regarding their monetary policies.

US Stock Market 2015: Stagnation

In 2015, we have experienced market stagnation, which was not observed in the last 10 years. Since the end of 2011, the market has shown a rapid growth each year, which stopped in October 2014 due to the Federal Reserve’s decision on the suspension of the buyback program of US government debt and, thus, monthly injections into the economy from 65 to 85 billion dollars. In addition, in October 2014, the Fed expressed their readiness on further increases in interest rates, which were at record low levels of 0-0.25% since 2008. This suggests that the regulator decided to turn its monetary policy 180 degrees: from a stimulating course to the deterrent.

Recall, that the actual increase became visible only on the 16 December 2015 (+25 basis points, from 0-0. 25% 0.25-0.5 per cent), after more than a year after the official announcement. This lag is partly the cause of stagnation in the stock market, being both the reason why many investors who left the market and closed their positions are not rushing to go back now. It can be explained by some other fundamental issues, which occurred by the end of 2015.

In December, the S&P 500 index fell by 1.75% to 2043, 94 points. During the year the index has not changed a lot. There is an increase in volatility in dynamics of an index in the second half of the year. The first signs of the onset of another crisis are becoming visible. The new crisis is not going to be inferior that the previous one.

US Stock Market 2015: Dynamics of the stock market.

The movement of the S&P500 index from 2000 to 2015, monthly chart.

As can be seen in the figure, the US stock market for the last 16 years basically had a clear-cut movement (both up and down). The main shocks occurred in periods of 2000-2002 (the crisis of the dot-com bubble) and 2008 (global financial crisis). And, as a rule, the market always drops rapidly due to panic. It is noteworthy that after both shocks, the market had recovered to its peak within five years. But the nature of the fluctuations of the market shows that the first collapse and the first restoration took place more gradually than a similar subsequent cycle. The actions of the market began to occur more intensively, both with the increased volatility.

By Chieffinancing 25.07.2016

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