Quarterly market outlook - 2nd Quarter, 2022

Our investment strategists provide the Edward Jones perspective on the latest economic activity and what it may mean for investors.

The Quarterly Market Outlook provides investors with our perspective on recent activity in the capital markets. The Edward Jones Investment Policy Committee offers its viewpoints on the U.S. economy, equities, the bond market, international markets and asset classes, as well as a special topic of interest to investors each quarter.

These aren’t short-term predictions. Rather, this is Edward Jones’ perspective on market and economic topics designed to help you make decisions affecting your long-term financial strategy. As you read through each topic, you'll find specific actions you can discuss with your financial advisor.

First quarter in review

The first quarter of 2022 faced two significant headwinds that soured investor sentiment and sent international returns into negative territory:

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Economic outlook

Over the past quarter, risks to economic growth have broadly increased. These include rising inflationary pressures, which have been exacerbated by the crisis in Russia/Ukraine, and waning fiscal and monetary policy support.

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Equity outlook

Market conditions shifted in Q1. Even though the TSX eked out a small gain benefiting from the commodities surge, the S&P 500 experienced its first correction since stocks bottomed two years ago. While headwinds are growing, we think the bull market remains well supported by solid economic growth and rising corporate earnings. As the cycle advances, we recommend remaining opportunistic but with increased focus on quality and diversification across asset classes and sectors.

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Fixed-income outlook

After two years of ultra-low interest rates, more than 10 years of above-average bond returns and over a quarter-century since the bond market faced such an abrupt series of interest rate hikes, we’re entering a new environment in which yields are rising on the back of high inflation and monetary policy tightening.

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International outlook

We see global economic growth moderating to the 3.0% range, down from nearly 6.0% in 2021, as central banks around the world begin to raise rates to contain rising inflation.

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High commodity prices: What’s the impact?

The conflict in Ukraine and sanctions against Russia, a major exporter of natural resources, have triggered supply disruption concerns and caused prices to rise. Oil

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Strategic asset allocation guidance

Our Strategic Asset Allocation represents our view of balanced diversification for the fixed income and equity portions of a well-diversified portfolio based on our outlook for the economy and markets over the next 30 years.

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Quarterly market outlook - Full report from Edward Jones

Download the entire quarterly market outlook report here.

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