Timely and Relevant News: Our Market Outlook Remains Optimistic

Business sentiment on Main Street has declined in recent months as the economy navigates the latest wave of COVID-19. Nevertheless, sentiment remains elevated as business leaders look past current obstacles. Still, COVID-19 related business challenges persist. While price increases are starting to level off, the global impact of the Delta variant has unwound some progress on supply chain bottlenecks and a near-term shortage of qualified workers continues to weigh on businesses’ ability to expand.

“Despite on-going challenges, U.S. businesses remain resilient,” said LPL Financial Chief Market Strategist Ryan Detrick. “We have seen economic expectations revised downward recently but the broad sense of optimism on Main Street persist despite slower economic progress due to the Delta variant.”

Labor markets and supply chains do remain a challenge for businesses. Both were seeing some improvement prior to the Delta wave. However, progress has stalled or even reversed in the past few months. However, there’s some reason for optimism here as well. With pandemic-related extended employment benefits recently expiring, kids returning to school and the Delta wave likely near or past its peak, we do think labor markets are primed for further recovery.

Despite the slowing pace of economic improvement and recent notable economic misses, especially the August jobs report - the trajectory of economic growth remains above the average pace seen over the last two decades. As economic expectations come down, we may once again be positioned for some upside surprises as the economy continues to recover. We do believe the pace of S&P 500 gains may slow, however we think there’s likely plenty of economic upside left to support further gains into 2022. Nevertheless, uncertainty around the impact of Delta does remain elevated and we continue to monitor market conditions closely.

If you have specific questions related to your own investment strategy or financial planning needs, we welcome you to call us at 302.234.5655 or email us atcontactus@covenantwealthstrategies.com to set up time to discuss further.