The stock market declined for the first three sessions of the year, and
Fortune writers Tom Huddleston and Stephen Gandel offer several reasons why equities may struggle throughout 2015.
- "Stocks are far from cheap," they note. The S&P 500 had a trailing price-earnings ratio of 19.37 Friday, up from 18.88 a year earlier, according to Birinyi Associates.
- "The Fed's interest rate hike is coming." The Federal Reserve has kept its federal funds rate target at a record low for six years, but economists' consensus is that the Fed will begin raising rates around mid-year. "Investors have been dreading the hike for some time now and any show of hawkishness from the Fed in 2015 could weigh heavily on the stock market," Huddleston and Gandel note.
- "Europe is still struggling." Economists are concerned that the eurozone economy could fall into recession and deflation. Consumer prices rose only 0.2 percent last year, and eurozone GDP climbed only 0.2 percent in the third quarter from the second.
- "There's just way too much oil." U.S. oil production has advanced to at least a 31-year high. That has helped push oil prices down 55 percent in the last six months to a 5 ½-year low.
They also note that China's slowing economy and the conflict in Russia could impact stocks this year
To be sure, stock market guru Laszlo Birinyi, president of Birinyi Associates, doesn't think the six-year rally is over for equities.
"I'm not really surprised that we have this situation, because I think we underestimated the event. I don't know what's going on with oil," he tells
Bloomberg. But "I'm still of the view that we're in a bull market, and you're going to have periods of interruptions and detours."