The S&P 500 hit record highs in the second quarter amid continued volatility.
Via Nova believes the U.S. economic expansion will achieve a new longevity record in 2019, and corporate profits will rise, creating a favorable environment for higher stock prices.
While much is made of the market adage to “sell in May and go away,” the S&P 500 gained 7.76% between Memorial Day and Labor Day, highlighting the risks of blind calendar investing.
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.
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.
The S&P 500, supported by continued favorable economic and earnings reports, weathered a roller coaster ride of international trade and political instability announcements to finish May with a 2.41% gain.
The S&P 500 finished nearly flat in April. Bonds continued to struggle.
The facts are positive: economy, earnings.
The fears are persistent: trade, Fed policy.
Via Nova’s outlook for the economy and stock market remains positive, but fears are likely to persist near term. Climbing the “wall of worry.”
- Rough sailing after relative calm, but stocks edged out bonds in Q1.
- What’s going right?
- What is troublesome?
- Via Nova’s outlook for the stock market remains positive, but increased volatility could be the new normal.
- 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.