1st Quarter 2017 Market Review & Commentary

The market continued rolling right along in the 1st quarter as corporate earnings growth and the prospect of tax and regulation reform kept investors in a good mood. For the quarter, the Dow Jones Industrial Average (NYSEARCA:DIA) was up 4.6%, the S&P 500 (NYSEARCA:SPY) added 5.5% and the Nasdaq Composite gained a remarkable 9.8%. Smaller companies, which had outperformed large caps by a significant margin in 2016, became laggards in 2017. The S&P 400 MidCap Index (NYSEARCA:MDY) was up 3.6% while the S&P 600 SmallCap Index (NYSEARCA:SLY) added just 0.6%.

^DJI Chart

^DJI data by YCharts

The economy continues to do well. Earnings and revenue growth have returned in a big way. After an earnings recession that resulted in five consecutive quarters of negative year-over-year earnings growth, things are again looking positive for corporate earnings. Analysts are forecasting 6.4% earnings growth in Q1 on roughly 6% growth in revenues. Consumer confidence readings are at levels we haven't seen in some 15 years. Unemployment rates are still hovering just below 5% while the core inflation rate has remained steady at around 2.2%.

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