On only five occasions over this period has the S&P 500 given up more than 2 percent of its value in the final month and a half of the year. We’re not inclined to fight that seasonal record. Looking ahead to 2018, 65 weeks have passed since the S&P 500 last endured a correction of 2 percent or more. We’d be surprised if stocks don’t break this historic winning streak at some point in the first quarter of 2018.
The near- to intermediate-term future looks bright for utility stocks and the sector’s prospects for earnings and dividend growth. However, with the Dow Jones Utility Average making new highs, investors must consider how much of this good news the market has priced in to sector favorites.
Global growth trades will prove to be the winners in this last phase of the bull market. But success with them will require accuracy and agility. Outperformance will favor strong stock pickers, as investment correlations that favored passive investment strategies break down while the bull market nears its end. Emerging markets should continue to outperform for the rest of the year.
We continue to see new market leaders emerging to carry stocks higher and expect the upside momentum to carry through the year’s end. Expect value stocks to benefit the most, leading us to add a strong value-oriented auto play to the portfolio.
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