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.
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.
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