Prediction 5: U.S. equities experience a positive return, but fail to reach record highs for the first time in 10 years.
Stocks are comfortably up in double digits this year, as the S&P 500 Index has climbed 18.5%.3 The end of the second quarter marks the fourth time that index has been trading in the 2,950 range over the past 18 months (after previously reaching this level in January 2018, September 2018 and May 2019).3 That means stocks really haven’t gone anywhere in a year-and-a-half.
Prediction 6: Non-U.S. stocks outperform U.S. stocks as the dollar sags.
Coming into the year, we expected non-U.S. economic growth to pick up more than it has relative to the U.S. economy. But U.S. growth still remains stronger, and the S&P 500 Index (up 18.5%) is ahead of the MSCI World Index ex-U.S. (up 15.1%).3 The dollar has also been stronger than expected, although if the Federal Reserve does cut rates, the value of the dollar will likely fall.
Prediction 7: The information technology, financial and health care sectors outperform utilities, REITs and materials.