Bull market or bear market - Essay Example

Lecturer Bull market or Bear Market The US stock is experiencing a bull market. It means that the US economy is becoming stronger. According to the estimates by the Congressional Market Office, the economy will grow by 3.1% in 2014, and jump to 3.4% in 2014 (Murphy 9). This is an indication that the US economy will be growing at a higher rate in years to come. One of the key reasons why the economy will grow substantially is the fact that many companies are hiring at a higher rate and so is the demand for goods and services.

For example, an increase in employment within the economy results to increase in the level of consumption. Additionally, as the national income increases, so is the demand for stock is the stock market. Over the next two years, earnings by companies will increase substantially as the demand for goods and services within US increases.The rate of interest in US is low, which results in an increase in the value of stock. In other words, the rate of interest and the prices of stock have a direct relationship (Murphy 18).

When the rates of interest are low, the earnings from bonds decreases, and the stock bec0mes more attractive compared to bonds. Another reason why there is a bull stock market is that many companies have fully recovered from the 2008 global financial crisis and are buying back their stock. The increase in the demand for stock grows the prices for the stock. As the number of companies that have fully recovered increases, so is the demand for the stock, thus the increase in their prices. Works CitedMurphy, John J.

Intermarket Analysis: Profiting from Global Market Relationships. Hoboken, N.J: Wiley, 2013. Internet resource.