The last few months have been increasingly taxing for the global economy and financial markets across the world. The rapid decline in crude oil prices, uncertainty with respect to the timing of the Fed rate hike, macroeconomic headwinds looming large in China and a slowdown in global markets were some of the economic factors at play. As things stand, the resulting volatility is not likely to dissipate any time soon.

Uncertainty Looms Large

Though the U.S. Federal Reserve kept the interest rate unchanged for the time being, reaffirming the current rate of 0–0.25%, a hike in the future cannot be ruled out, as per the Sep 17 release of the U.S. Federal Reserve.

Moreover, concerns related to China are likely to prevail. The economy, which for so long was absorbing recessionary blows, has taken a beating and a revival may not be in the cards. It became evident when September trade data showed that exports were down 3.7% from the same period last year while imports plunged 20.4% in dollar denominated terms.

Meanwhile, according to information provided by FactSet, it appears that the S&P 500 will report a year-over-year decline in earnings for the third quarter. If this happens, it will be the first time for the index to suffer two consecutive quarters of year-over-year earnings decline since the second and third quarters of 2009.

And the picture for the fourth quarter is not rosy either. Analysts believe that earnings will decline in the fourth quarter too. The estimated earnings growth rate for the fourth quarter, which was 4.3% on Jun 30, declined to 0.2% and is now -0.4%.

So, the remainder of the year may not be any different from the year so far. In this dismal scenario, where an economic recovery seems to be elusive, what will investors turn to? If a man as rich as John D. Rockefeller could once say – “Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.” – we know where the answer lies.

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