Charles Schwab Chief Investment Strategist Liz Ann Sonders says Congress’ inability to deal with the U.S.’s “fiscal cliff” is preventing rallies in the stock market — and leading to the recent slowdown in hiring.
“The market’s poised for rallies, but you’d be crazy to play them aggressively at this point,” Sonders tells Investment News. “We’re in kind of a dead zone for the near term.” She says businesses just aren’t sure how to proceed given the regulatory and policy uncertainty, and that that is hampering the economy and job growth. “It is probably having the biggest impact on business psychology right now,” she said. “We’re seeing that the business is there, but business leaders are hesitant. That’s been one of the main reasons for the slowdown in hiring.”
The article also includes comments from Matt Fruhan, whose Fidelity Large Cap Stock Fund has been a strong performer over the past three and five years.. “One of the things I learned from 2008 and last summer is that it’s good to have a lot of dry powder on hand if you think you’re entering a period of volatility,” Fruhan said. “Use periods of uncertainty to add to names you like and think are attractive long-term stories.”
At the end of the second quarter, however, Fruhan was holding very little cash, according to Fidelity’s site. “Mr. Fruhan still feels comfortable thinking long-term, despite the short-term volatility, because in his view, the fundamentals haven’t really changed since 2008,” writes Investment News’ Jason Kephart. Says Fruhan, “The long-term issues haven’t really changed. The world is still going through a deleveraging process.”