…many investors have been hesitant about entering the market because of the slow recovery of the economy. Now, a number of recent data points suggests that the recovery may be gaining traction. This week, new claims for unemployment benefits fell to the lowest level in five years.
Even many optimistic strategists say that a short-term break from the market rally is likely until there are more indications that the economy is growing. And given that January is historically a strong month for stocks, more bearish analysts have said the recent rally is likely to fade. One drag on growth could come from the recent increase in payroll taxes.
There is also a sizable contingent of investors who think that the European debt crisis and United States fiscal position still represent significant threats.
But Russ Koesterich, the chief investment strategist at BlackRock, said that the current threats were “mundane” in comparison to what investors faced the last few years. “We’re not talking about big crises anymore,” he said.