Market Outlook

Stocks higher as summer begins. Will they hold through the dog days?

The S&P 500 rose an impressive 3.72% in July, supported by strong economic and earnings growth as well as a slight lessening in trade tensions. Via Nova’s outlook remains positive, but near term, the dog days of summer may weigh on stocks particularly in a mid-term election year.

REVIEW & OUTLOOK: STOCKS ADVANCED DESPITE HEIGHTENED TRADE TENSIONS

We believe the facts of a healthy economy and strong earnings growth justify a bias in favor of equities and away from bonds. However, less accommodative central bank policies and the potential for a trade war are tangible threats to an otherwise positive outlook.  Caution, not fear, is warranted.

STOCKS CONTINUED THEIR IMPRESSIVE PERFORMANCE IN JANUARY; CAN IT LAST?

KEY TAKEAWAYS

  • Overall outlook for 2018 is positive as the economy continues to recover and grow.
  • Risks include unexpected increases in inflation and faster-than-expected interest rate hikes.
  • Bonds may become a less desirable investment.
  • Near-term stock market weakness likely a buying opportunity.