Probably not an end to the market rally
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This past week, mixed earnings reports from Alphabet, Meta, Microsoft, Amazon and Apple contributed to a brief pause, but probably not an end, to the market rally.
The longer-term returns for U.S. stocks have been impressive.
Despite terrible years the S&P 500’s overall performance over the last decade has been splendid. Including dividends, it has generated a total return of 13.2 percent annualized and 246 percent cumulatively.
That decade includes the coronavirus pandemic, wars in Iraq and Afghanistan, as well as in Ukraine and the Middle East.
Even though inflation has been falling and the Fed has cut short-term rates in response, rates set in the bond market have been rising.
Treasuries are the ultimate safe asset against which all others on the planet are priced. But another, ancillary market — for credit default swaps — is painting an ugly picture of U.S. government finances.
Credit default swap prices reflect market estimates of the likelihood that a sovereign nation like the United States may be unable to pay its obligations.
By this measure, U.S. debt is riskier than that of every major nation and even of smaller ones, like Hungary and Bulgaria.
Many investors have prospered by shrugging off market news — as well as the guidance of Wall Street brokerages — instead holding cheap, broad index funds for many years, and just capturing market returns.
Jeff Sommer New York Times 1 November 2024
https://www.nytimes.com/2024/11/01/business/election-stocks-bonds-deficit.html
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