Investment Review - September 2016
- The major U.S. equity indices were essentially unchanged in August despite reaching all-time highs mid-month. Over the past 30 days, the Dow Jones Industrial Average and S&P 500 were flat while the Nasdaq Composite increased just +0.6%. The markets may be temporarily range-bound awaiting more evidence of economic strength.
- Expectations for higher U.S. interest rates have resulted in the dollar strengthening. A stronger dollar may pose a headwind to forecasts for higher revenues and earnings next year. Analysts estimate S&P 500 revenue will grow about 6% in 2017 after increasing less than 2% this year. Earnings for 2017 are, likewise, expected to increase nearly 14% year-over-year.
- The Bank of England (BOE) cut its benchmark interest rate to 0.25% from 0.50%, an historic low. The BOE stated the economic growth outlook for 2017 had “weakened materially” even while recent economic data has positively surprised. Central banks around the globe have employed unprecedented monetary easing measures to counter slowing growth.
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