Quarterly market outlook - 4th 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 offers 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.

3rd quarter in review

Stocks finished Q3 broadly lower amid a spreading delta variant and inflationary pressures. The bull market has room to run, in our opinion, but volatility is likely to increase.

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Economic outlook

After averaging strong GDP growth in the first half of the year, the delta variant and the fading boost from stimulus checks are prompting a notable slowdown. We see the soft patch as temporary, however.

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Equity outlook

U.S. equities continued their climb in Q3, but markets are facing growing walls of worry. We believe markets can overcome these hurdles and move higher, although perhaps at a slower and somewhat bumpier pace than we’ve seen so far this year.

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Fixed-income outlook

We believe bonds will continue to play an important part in a well-diversified portfolio, even as returns likely stay muted. They can provide a steady stream of income, diversification benefits and liquidity during equity market pullbacks, which might become more frequent.

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International outlook

The global recovery’s momentum was disrupted with the spread of the delta variant, persistent supply chain challenges and a slowdown in Chinese growth. Despite the hiccups, the economic reopening and loose central bank policies support the case for diversifying with international stocks.

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Outlook for fiscal and tax policy

An unprecedented amount of fiscal stimulus helped the economy bridge the depths of the pandemic – but it comes with sizable budget deficits and tax hike proposals. We don’t believe a shift in fiscal policy will derail the expansion, but reduced monetary and fiscal stimulus will put more onus on the labor market to drive GDP growth.

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Asset allocation guidance

Get our latest guidance for a strategic asset allocation (10- to 30-year period) and an opportunistic asset allocation (one to three 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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