ECONOMIC GROWTH WILL RELY ON BUSINESS FUNDAMENTALS

A renewed emphasis on business fundamentals will encourage moderate economic growth.

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A shift in market dynamics has prompted an improving economy to move away from monetary policy dependence toward a reliance on business fundamentals to spark growth. This is one of the notable trends discussed in a new whitepaper, Midyear Outlook 2017: A Shift In Market Control, created by LPL Research.

 

Based on extensive quantitative and qualitative analysis, the whitepaper features timely, insightful assessments, such as the Federal Reserve scaling back bond purchases and considering raising interest rates. Fiscal policy is sidelined until congressional tax reform, infrastructure spending, and deregulation are settled. Fueled by solid corporate earnings, the economy is expected to grow by 2.5%*, while the S&P 500 Index is forecasting returns of 6% to 9%.**

 

Discover how evolving market dynamics can affect the investment outlook for the remainder of 2017 by downloading the Midyear Outlook 2017: A Shift In Market Control today.

If we are shifting to new market dynamics, including a greater role for corporate profits and fiscal policy, understanding the evolving opportunities will be important for diversified investors.

* We continue to look for the U.S. economy to expand up to 2.5% in 2017, although potential delays in passing major fiscal policies introduce some risk to the downside. Data on consumption, employment, housing, manufacturing, and services all point toward improvement in the months and quarters ahead following sluggish first quarter Gross Domestic Product (GDP) growth.

** As investors increasingly trust that the economy can stand on its own without the need of monetary policy support, business fundamentals should take over as the primary market engine and corporate profits will take on increasing importance. We have slightly raised our 2017 S&P 500 Index total return forecast to 6 – 9%, commensurate with expected earnings gains.

Economic forecasts set forth may not develop as predicted, and there can be no guarantee that strategies promoted will be successful.

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