Investors Focus on Positives, Ignoring Negatives
Investor sentiment remained skewed positive last week, helping equity markets rally sharply. The S&P 500 Index surged 3.1%, as the focus remained on prospects for better economic growth, tax reform and potential fiscal stimulus in 2017. For the week, small caps and financials led the way, while health care stocks lagged.
Read an excerpt of the complete commentary below, or view the entire weekly investment commentary as a PDF.
Key Points:
- Equity markets continue to rally, with investor sentiment improving since the summer.
- Rising bond yields and the climbing U.S. dollar are potential negatives for equities, but markets have remained resilient so far.
- Despite some clear risks, we retain a pro-growth, pro-risk investment stance.
What’s Behind the Recent Rally?
The current rally appears to have been primarily triggered by November’s election results and higher prospects for a pro-growth, pro-business legislative agenda. However, we believe fundamental economic and earnings improvements emerging over the summer are just as important.
The rally is also fueled by a not atypical year-end seasonal bounce and investors who may have missed the initial rally adding to positions. For now, investors are looking past issues such as potential negatives from the political environment, elevated sentiment, stretched valuations and possible issues associated with Federal Reserve policy. The broad pro-risk shift will likely continue through year-end and into early 2017.
Download Nuveen Asset Management's complete commentary, or read JP Morgan's predictions for 2017.
To learn more about Nuveen Asset Management and other Money Managers, give us a call at 1-800-541-7774 or contact us here to speak with one of WrapManager's Wealth Managers.
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