Reuters Poll Points to US Rates, Earnings and Election will Limit Q4

Uncertainty surrounding the U.S. presidential election, expectations for higher interest rates and weak corporate earnings will keep U.S. stocks from advancing much in the fourth quarter, according to strategists in a Reuters poll.

The benchmark S&P 500 index .SPX will end the year at 2,173, according to the median forecast of 40 strategists polled by Reuters over the past week. That would be up slightly from Monday’s finish of 2,161.2 and a gain of about 6 percent for 2016.

Between July and August, the index hit a series of all-time highs, with the record close now standing at 2,190.15. But strategists expect the S&P to surpass that in 2017, notching up a yearly gain of about 6 percent to 2,310.

Strategists were more optimistic than they were in July, shortly after Britain’s vote to leave the European Union.

But the race for the White House between Democrat Hillary Clinton and Republican Donald Trump will take on greater importance as the Nov. 8 vote approaches and should cause more volatility, especially in sectors like health insurance, pharmaceuticals and energy, strategists said.

In the poll, respondents overwhelmingly viewed a Clinton victory as more positive than a Trump win for U.S. stocks, at least until year-end. Indeed, a perceived win by Clinton in the first presidential debate of the season on Sept. 26 helped support U.S. equities the following day.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza