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2021 Midyear Market Outlook Update

  • Investors face new challenges due to outlooks for slower growth and the likelihood that interest rates will rise (but remain historically low).
  • Considering quality, size, and credit exposures may help investors reposition portfolios as the growth tailwinds enjoyed in 2021 may not be the driving force in future returns.  

As the days grow shorter in between earnings seasons, a host of risks that investors ignored all summer due to strong earnings have come into focus — the surging Delta variant, dysfunction in DC, questions about the Biden administration’s fiscal policy agenda and the Evergrande crisis. Plus, the Federal Reserve has signaled it could begin tightening monetary policy. With worries mounting, the S&P 500 Index suffered its first decline in seven months in September.1

Michael Arone, CFA, Chief Investment Strategist, US SPDR Business and Matthew Bartolini, CFA, Head of SPDR Americas Research sit down to discuss the latest market dynamics impacting the recovery and strategies for positioning portfolios amid concerns about the future sustainability of both earnings and the economy.

Find additional insight on how to participate in a policy-supported market with elevated valuations and how to source “real” levels of income within bond portfolios on our SPDR Blog.

Click here to watch the video

Originally Posted on October 7, 2021 – 2021 Midyear Market Outlook Update

Footnotes

1 Bloomberg Finance, L.P., as of September 30, 2021

Disclosures

The views expressed are the views of Michael Arone and Matthew Bartolini as of October 4, 2021 and are subject to change based on market and other conditions. The opinions expressed may differ from those with different investment philosophies.

Investing involves risk including the risk of loss of principal.

Equity securities may fluctuate in value and can decline significantly in response to the activities of individual companies and general market and economic conditions.

Bonds generally present less short-term risk and volatility than stocks, but contain interest rate risk (as interest rates raise, bond prices usually fall); issuer default risk; issuer credit risk; liquidity risk; and inflation risk. These effects are usually pronounced for longer-term securities. Any fixed income security sold or redeemed prior to maturity may be subject to a substantial gain or loss.

This communication is not intended to be an investment recommendation or investment advice and should not be relied upon as such.

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