From Streettalk Off The Street January 16, 2013 - 10:11am
January 16, 2013
By: Russ Koesterich, CFA
The US stock market rally that kicked off the New Year continued last week, and after only two weeks, US stocks are up around 3% for the year. European stocks have posted similar gains and equities in Japan have advanced even further. What’s behind this rally – and more importantly, can it continue?
In my view, the rally can be attributed to three factors. The first is obviously relief over the fiscal cliff deal . Also, some investors sold winning investments in December in an attempt to generate capital gains in 2012 before capital gains taxes were scheduled to increase in 2013. Because capital gains rates did not change for most Americans, however, many investors are now buying back the stocks they had sold.
Second, stocks are benefiting from a normal period of seasonal strength. While the so-called “ January effect ” ...