At T. Rowe Price, we believe the fundamental underpinnings for equities remain positive and should support continued gains. Nevertheless, you may wish to temper your clients' expectations, as returns may be more muted and markets more volatile.
Adviser key takeaways
- On balance, we remain optimistic on the outlook for both large- and small-cap stocks, although the US market will face some risks.
- Continued economic growth, rising earnings, healthy consumer and business balance sheets, and lower taxes could support further market gains.
- Technology and health care have outperformed, yet their relative valuations still appear reasonable and earnings projections remain strong.
- However, your clients should temper their expectations for equity returns from the ageing bull market amid elevated valuations and peak profit margins.
Underlying economy appears supportive
The general economic backdrop remains constructive, with global growth improving. US economic growth has been sluggish, but a moderate expansion could extend the cycle. Consumer and corporate balance sheets and the housing market are generally healthy. Inflation remains tame for now. Business investment is improving. Read the T. Rowe Price 2018 Global Market Outlook
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