The Market’s “Sweet 16”: Top Seeds and Potential Bracket Busters

In the spirit of March Madness, we have compiled our “Sweet 16” for the stock market, complete with some top seeds and potential bracket busters. We identified 16 keys for stocks for the remainder of the year and assessed their potential market implications.

One of the top seeds is U.S. gross domestic product (GDP) growth, which we expect to accelerate from 2.3% in 2017 to 2.75–3.0% in 2018; this includes a 0.25–0.5% boost from the new tax law. Another high seed is earnings. Chief Investment Strategist John Lynch explained, “With economic growth improving, manufacturing humming, and analysts’ estimates soaring, we expect earnings gains in the mid-teens for the S&P 500 Index in 2018.” Trade policy is the one potential bracket buster on the list that could pull off an upset. Though the recently announced steel and aluminum tariffs may have limited economic impact, tensions could escalate into a trade war with China.

Look for our thoughts on these 16 market factors in this week’s Weekly Market Commentary, due out later today. Next week we reveal our “Final Four” where we will take a deeper dive into some of these market drivers.

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The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.

Past performance is no guarantee of future results.

The economic forecasts set forth in the presentation may not develop as predicted.

Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.

Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments, and exports less imports that occur within a defined territory.

The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

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