Quarterly market outlook - 2nd Quarter, 2021

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

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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.

1st quarter in review

Global stocks rallied to fresh record highs in Q1, but on the flip side, bonds posted losses as long-term rates rose. We expect the bull market to endure and stocks to continue to rise – but at a slower pace and with occasional shakeouts.

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Economic outlook

The recovery is poised to gain steam this year, driven by the vaccine-induced reopening, falling unemployment and a heaping dose of fiscal stimulus. We think 2021 will experience the strongest growth of this expansion, followed by a trend toward more normal levels.

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Equity outlook

Following the strongest first year of a bull market on record, market sentiment is optimistic, but we don’t think the gains are exhausted. As with past bull markets, though, returns will likely moderate, and pullbacks might become more frequent.

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Fixed-income outlook

In Q1, investment-grade bonds experiencing their worst quarterly performance since 1981. We expect stocks to continue to outperform bonds as the recovery picks up steam, but the speed at which rates are rising will likely slow.

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International outlook

Renewed pandemic restrictions in Europe and more modest fiscal stimulus responses abroad have tempered the global economic rebound. Despite the lag, we think a more coordinated upswing in world GDP is in the cards later this year, which should bode well for global equities.

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Outlook for fiscal and tax policy

We think fiscal policy will be more of a tailwind than a headwind this year. Potential tax increases are likely to add some anxiety to the stock market, but we doubt they will undermine the broader expansion.

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Asset class outlook

You already know that nothing is certain. But there are strategies that can help.

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Quarterly market outlook - Full report from Edward Jones

Download the entire quarterly market outlook here.

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