Overall, the data indicates that the current relatively positive estimates for 2017 earnings growth are likely to be fairly close to reality. More, as we get closer to each quarter-end, those estimates may be more likely to be revised up than down. In other words, the fundamentals will likely continue to improve, and possibly even accelerate, which should serve as a significant support for the stock market.
None of this is guaranteed, of course, but just as we (correctly) looked at the numbers at the start of this quarter and predicted that earnings would likely fare better, we can do the same for 2017. With half of the stock market equation in good shape—and consumer and business confidence improving, which will support the other half—the rest of the year looks likely to remain positive.
By no means am I suggesting that we won’t see any pullbacks; we almost certainly will, and potentially significant ones. But the foundations of the market remain solid, and although market risks remain high on a macro level, the immediate risk level doesn’t appear to have increased significantly. We will, however, look into that with our regular monthly risk update next week.
Brad McMillan is the chief investment officer at Commonwealth Financial Network, the nation’s largest privately held independent broker/dealer-RIA. He is the primary spokesperson for Commonwealth’s investment divisions. This post originally appeared on The Independent Market Observer, a daily blog authored by McMillan.