Equities continued their positive trend in April, spurred by favorable corporate earnings reports, proposed federal tax cuts, and positive economic signals overseas.
The NASDAQ surpassed 6000 for the first time in its history, while the small-cap Russell 2000 reached a record high by the end of April.
First quarter earnings and revenues are surprising on the upside. This continues a multi-quarter rebound, allowing for continued market strength.
Domestic large-cap stocks have outperformed small-cap stocks, and we expect this trend to continue.
Valuations appear to favor lower yielding sectors and therefore we expect growth to outperform value. This is reflected in our recent asset allocation changes.
The global economy is picking up steam. We recently increased our international equity exposure based on improving growth prospects and attractive valuations.
GDP increased at an annual rate of 0.7% in the first quarter, the slowest in three years.
Bond yields declined in April as geopolitical concerns and weak economic data outweighed solid corporate earnings and the release of the White House tax reform proposal.
The Fed left rates unchanged in May, and indicated there will be two more hikes in 2017. We expect modest changes in bond yields due to subdued inflation and growth expectations.
- This information has been compiled using data and other statements of fact derived from sources which we believe to be accurate and reliable. However, such data and other statements of fact have not been verified by us, and we do not make any representations as to their accuracy or completeness. Any opinion expressed herein reflects our judgment at this date and is subject to change.