Market Performance Overview

  • Domestic equities continued their trend upward, with the S&P 500 contributing 4.5% in the quarter (14.2% YTD).
  • Foreign equities continued to produce strong returns due to a strengthening global economy and falling dollar.
  • Domestic bonds were positive, but continue to face headwinds due to potential future rate increases.
  • Foreign bonds produced positive returns YTD and offer additional diversification benefits as rates rise.

2017 Market Recap

The markets in 2017 have largely been defined by the Trump presidency, expectations for Federal Reserve interest rate policy and an uptick in political turmoil, including uncertainties surrounding North Korea. Recent hurricanes Harvey and Irma are expected to dampen Q3 GDP growth due to the economic disruption from the large amount of damage in Florida and Texas. However, this is largely viewed to be temporary as the rebuilding efforts will contribute positively to GDP in the months ahead. Strong earnings and expectations that the Trump administration will pass pro-growth legislation including repatriation (bringing dollars held overseas back to the U.S.), tax reform, and deregulation have helped fuel the rising markets. While the current administration has been off to a slow start, positive economic growth, low unemployment, and GDP growth trending toward 3% have kept the markets pushing higher. With the healthcare debate pushed aside for the time being, it seems that the Administration can begin to focus on its pro-business, pro-growth legislation. Due to the length of the current bull market run, questions are beginning to surface on how long the run can last. While the current cycle has lasted longer than most in the past, we continue to believe that there is room for the markets to move higher going forward, but we remain cautious as we move higher in the valuation range.

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