This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

S&P Dow Jones Indices Recaps 2012 Financial Market Performance; Identifies Headwinds That Could Impact Returns In 2013

The 2013 market situation appears to be very challenging. At best, a political solution to the U.S. fiscal cliff will emerge, although lawmakers may bandage the situation and kick the problem down the road. Still, several scenarios would appear to have a higher degree of certainty for investors, including long-term dividend issues.  With interest rates low, and the (current) Federal Reserve promising to keep them there, income-seeking investors will continue to enjoy few choices: Bank CD rates are minuscule and longer-term bonds, whose rates also are low, require that owners hold until maturity or face principal declines when rates start to inch up.  Yields remain relatively high. While actual dividend payments set a record in 2012, companies still are paying out just 34% of their profits versus an historical rate of 52%. Even if no issue changes its dividend rate through 2013, next year's payment will be 6% higher than 2012. 

Taxes will remain the major issue.  Some adjustment to the dividend tax rate will be made, with the potential for a 2013 modification being made retroactive. Regardless of the tax structure, even at the full 43.4% scheduled rate, dividends may be the only game in town for investors looking for current income.  Expect some type of accelerated depreciation schedule to encourage companies to purchase new equipment and, potentially, hire workers.  While congress will attempt to encourage companies to buy American, international trade agreements limit their ability. We expect some type of change from Congress, especially for smaller companies.  S&P Dow Jones Indices also anticipates continuing declines in European sales that would put pressure on profits and reduce margins.  Today, 46.1% of S&P 500 sales are foreign, with 11.1% coming from Europe."

Municipal Bond MarketOn the performance of the U.S. municipal bond market in 2012, JR Rieger, Vice President of Fixed Income Indices at S&P Dow Jones Indices says:

"Reaching historically low nominal yields, 2012 saw the municipal bond market continue as a flight to quality and income-generating asset class.  But, relative to other fixed-income asset classes, municipal bonds have generated higher yields on a taxable-equivalent yield basis.  Low supply of new issues versus high demand for tax-exempt, income-generating assets sustained an imbalance that pushed prices higher.  High-yield municipal bonds saw yields decline the most and outperformed the general municipal bond market as income-driven investors pushed cash into municipal bond mutual funds.  New municipal bond monetary defaults haven't approached some end-of-2010 apocalyptic projections.

4 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.18 1.60%
FB $117.44 -0.95%
GOOG $692.33 -0.84%
TSLA $232.12 -4.00%
YHOO $36.02 -1.40%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs