Factors That Will Shape U.S. Market Activity Throughout The Next Quarter

Investors have been pretty uncertain with regard to what to expect from US markets lately. Unfortunately, there are several factors that are currently weighing heavily on the market and investor mindsets. With that said, today we're going to talk about several factors that are likely to shape the performance of US stocks over the next quarter and quite possibly the rest of the year 2015. So, let's get right to it…

Factor #1: Consumer Spending

Consumer spending makes up a major piece of GDP in the United States; and throughout the beginning of 2015, this figure has been struggling. However, spending in May finally picked up; and in a big way.  With a gain in consumer spending of 0.9% in the month, May was actually the best month for this figure since 2009. Now the question is whether or not this is a one-off event. If consumers continue to spend more, it will likely have a positive affect on the market. However, if the figure dies back down, the market is likely to feel the pain. While some experts point to the fact that low gas prices will put an extra $700 in the hands of the average American over the course of the year as a reason that growth will continue, others point to economic uncertainty around the world as a reason for consumers to keep saving rather than spending. So, this is definitely something that we'll want to watch closely.

Factor #2: The Strong United States Dollar

The United States dollar is incredibly strong right now and has been throughout the first half of the year 2015. The strong dollar is lasting quite a bit longer than experts expected to see; and if it continues, it will likely create major issues. As a matter of fact, due to the strong US dollar in conjunction with a struggling energy sector, experts are expecting that earnings in the S&P 500 this season are going to see a decline of around 3%. As most investors know, weak earnings are likely to drag stock valuations down.

Factor #3: Worldwide Uncertainty

Market conditions around the world are becoming increasingly gloomy. We've all heard about the Greek Debt Crisis and the market declines experienced in China. The gloomy worldwide conditions have already caused declines in US markets; and many experts are expecting these gloomy conditions to have a further effect on markets throughout the year. While the Chinese government takes extreme steps to solve the problem in their market, Greek diplomats are working feverishly to solve the issues they're facing. Nonetheless, until a clear solution to these problems becomes apparent, investors are likely to remain concerned and make more subtle moves in the market. So, these are also going to be important events to watch as they unfold.

Factor #4: Oil, Oil, Oil!!!

Oil has been a big topic of conversation recently since the massive decline in the value of the commodity in late 2014. While we've seen a slow recovery since the lows; the oil market is likely to hit more issues moving forward. With the energy sector playing a key role in the S&P 500, experts are expecting the index to feel the pain. Also, with an Iranian nuclear deal on the horizons, more oil will flood the market; bringing the value of the commodity down even further. This is likely to strike more uncertainty among investors.

Factor #5: Whether Or Not Investors Will Fall For Buybacks

Recently, we've seen an increasing amount of corporations buying stocks back from their investors. This is a common move designed to show investors that the corporations buying the stocks back are optimistic with regard to their futures. However, more and more experts are starting to feel as though these buy backs are designed to display false hopes; hopefully keeping investors optimistic. So, the big question here is whether or not investors are going to fall for what CNN is calling “Buyback Baloney”!

Tying It All Together

All in all, conditions don't seem to be favoring growth in the US markets; at least throughout the next quarter. With that said, I'm expecting to see a mix of sideways movements and declines over the next few months. However, there is a shimmering silver lining to the dark cloud. If all goes well, strong consumers spending momentum could keep the market afloat during troubling times. Nonetheless, I'll be hoping for the best while bunking down for the worst.