U.S. equity markets climbed higher consistently throughout February as fourth-quarter earnings results were solid and nominal economic growth continued to strengthen. Despite some theatrics from Washington, optimism remains for President Trump’s pro-growth agenda. The S&P 500 Index reached a new all-time closing high of 2,369.75 on February 27. Large-cap stocks as represented by the S&P 500 Index gained 4.0%*, outperforming small-cap stocks measured by the Russell 2000 Index which rose 1.9%.*
U.S. GDP growth accelerated markedly between the first and second halves of 2016 and recent economic data suggests that growth will continue at a reasonable pace in the first half of this year. The Conference Board’s measure of consumer confidence hit a 15-year high in February, bolstered by expectations of favorable job and income prospects and suggesting that consumption growth will remain healthy. Optimism seems to be finally improving for businesses as well, with the National Federation of Independent Business (NFIB) Index of Small Business Optimism posting a 13-year high in January. The global economy appears to also be on the mend, with indicators for both manufacturing and non-manufacturing rising in the Eurozone and Japan over recent months.
U.S. equity markets continued to advance in January as fourth-quarter earnings results were solid and economic data pointed towards continued growth, which offset declining optimism that President Trump can fully implement his pro-growth agenda. The S&P 500 Index reached a new all-time closing high of 2,298.37* on January 25. U.S. equity markets drifted lower in the month’s final days as President Trump signed executive orders on trade policy and immigration. Investors fear that the president’s stance on trade and immigration are counterproductive to the pro-growth policies he looks to implement. Large-cap stocks as represented by the S&P 500 Index gained 1.9%*, outperforming small-cap stocks measured by the Russell 2000 Index, which rose 0.4%*.
The year began on a note much like it ended in December, with encouraging economic data and the financial markets optimistic over the prospects for a more pro-business environment in Washington. Commodity markets seem to be enjoying some support and the global economy also appears to be on the mend; a much more encouraging backdrop than was in place a year ago.
Immediately following the presidential election, U.S. index futures plunged and at one point, futures for the Dow Jones Industrial Average dropped nearly 900 points*. Surprisingly, as investors absorbed the implications of this political sea change, key indexes rebounded and ended higher on November 9. The Dow went on to close at a record high level on November 10 and finished up for the quarter. Financials led the advance, first benefiting from investors’ hopes that the new Republican administration would roll back industry regulations and second, from the Federal Reserve’s (Fed) decision to raise short-term interest rates for the first time in 2016. Citing signs that the economy has improved, the Fed also stated it intends to raise rates three times in 2017. Similarly, optimism that policy makers will carry through on promises of considerable infrastructure spending helped share prices in the industrials and materials sectors and the pledge to expand domestic oil and gas production boosted energy companies’ shares.
Invest better: Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not
be repeated. Mutual fund securities are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer.