01-04-2011 09:25 BJT
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2010 was the year of the bulls on Wall Street. The Dow finishes the year with a 11-percent gain. The S&P 500 rises 12.8 percent and the Nasdaq scores 16.9 percent.
Many investors are greeting the New Year persuaded the world economy's on the mend and riskier assets like stocks will do well. If history is an indicator, they may be right. One trend that may bode well for U.S. stocks, 2011 is the third year of the President's term in office.
Standard & Poor's Chief Investment Strategist Sam Stovall:
"Since World War II the S&P 500 has never declined in the third year, and uh, the first two quarters of this New Year are the strongest of the entire 16 quarters of the presidential cycle, so at least the beginning of the year has some very positive overtones."
Positive but not prize winning. Stovall expects equities to rise 7.5 percent in 2011. A slew of economic issues will likely keep a lid on gains: high unemployment, a possible further drop in home prices and high debt levels for governments and consumers. Still, he sees equities outpacing bonds and pricey Treasuries. For 2011 Stovall recommends investing in large companies with dividends in cyclical sectors.
Sam Stovall, Chief Investment Strategist of Standard & Poor's said "Industrials, information technology, materials and to a lesser extent- consumer discretionary. Primarily because I think valuations are still low and we're seeing better-than-expected demand on the consumer side, and we still believe we are going to avoid a double-dip recession both here in the U.S. and around the globe."
As the bull market enters its third year, one thing most market watchers expect, 2011 is going to be a year of volatility.
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