Market Outlook for Q2
With strong Q1 gains under investor belts, now comes earnings season and a flurry of economic news. Whither tax reform?

So long Q1, it’s been good to know ya. What’s the outlook for April and the rest of the year?
25 Dividend Stocks You Can Buy and Hold Forever
More positive than negative, actually, for the immediate future. The Trump bump lost some momentum in March thanks to the GOP failure to repeal Obamacare, but both markets and corporate results delivered solid results in the first quarter. Hospital stocks rallied. Meanwhile, year-over-year quarterly profit growth is projected to have hit a multi-year high. And we haven’t gotten to earnings season yet.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The technology heavy Nasdaq Composite led all comers with a 10% gain, setting record highs in Q1. The Standard & Poor's 500-stock index added 6%, while the blue-chip Dow Jones Industrial Average gained 5%. It was the Dow's sixth consecutive quarterly gain, its longest streak since 2006. The Russell 2000 index of small companies rose 2%.
Top performing sectors three months into the year include information technology with a 12% gain and heath care, which is up 8%. Consumer discretionary and consumer staples are up 8% and 6%, respectively.
First-quarter sector laggards include energy, down 7%, and telecommunications services, which lost 5%.
Earnings
The first quarter may look better when earning season debuts in mid April. Analysts are expecting good things. S&P 500 earnings growth is forecast to rise 9.1%, according to FactSet. That would represent the highest year-over-year quarterly growth since the final quarter of 2011.
Drilling down, the financials sector is expected to record the highest year-over-year increase, up 15%. Rising interest rates should fuel the sector over the course of the years. Stocks that stand to gain from higher rates include Bank of America (symbol BAC), JPMorgan Chase (JPM) and Berkshire Hathaway (BRK.B).
After financials, earnings for IT and materials are expected to rise 13% and 11%, respectively. The industrials sector is forecast to be the quarter's biggest loser, with a 7% drop in year-over-year earnings.
Ex-Dividends
There are some prominent names going ex-dividend next week: Cisco Systems (CSCO), Kimco Realty (KIM), JPMorgan Chase, American Express (AXP), and General Mills (GIS). A dividend stock’s ex-dividend date is the last day on which an investor can buy shares and still qualify for the next dividend payment. Properly timing your dividend payments allows you to generate income for every month of the year.
Economic Outlook
The markets also will be focusing on upcoming economic releases. Among the highlights, the Institute for Supply Management will release its manufacturing index on Monday, April 3. Although manufacturing is a small part of the economy relative to services, it's considered to be better barometer of the economic cycle. The Apr. 4 report on new factory orders will serve much the same purpose.
Also on Tuesday, the Commerce Department's balance of trade report will garner extra attention, given the Trump administration's hawkish stance on bringing down deficits with major trading partners such as China.
The mother-of-all releases comes Friday, Apr. 7. That's when the Labor Department will issue the March jobs report. The economy created 235,000 jobs in February. But Kiplinger's economic outlook expects hiring to slow to an average rate of 160,000 a month in 2017.
The market's overarching concern heading into April is the prospects for corporate tax reform, especially after the failure of the health care bill left investors feeling jittery, says Michael Townsend, chief for legislative and regulatory matters at Charles Schwab & Co.
"[Tax reform] is likely to be a lengthy and convoluted process, with unpredictable hiccups along the way," Townsend writes. "Investors should be wary of reading too much into the inevitable fits and starts, and remain focused instead on their longer-term goals.”
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Dan Burrows is Kiplinger's senior investing writer, having joined the publication full time in 2016.
A long-time financial journalist, Dan is a veteran of MarketWatch, CBS MoneyWatch, SmartMoney, InvestorPlace, DailyFinance and other tier 1 national publications. He has written for The Wall Street Journal, Bloomberg and Consumer Reports and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among many other outlets. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange.
Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.
In his current role at Kiplinger, Dan writes about markets and macroeconomics.
Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.
Disclosure: Dan does not trade individual stocks or securities. He is eternally long the U.S equity market, primarily through tax-advantaged accounts.
-
Claiming the Standard Deduction? Here Are Ten Tax Breaks For Middle-Class Families in 2025
Tax Breaks Working middle-income Americans won’t need to itemize to claim these tax deductions and credits — if you qualify.
-
Are Trump Tariffs Even Legal? Three Things to Know About the Latest Court Ruling
Tax Law The outcome of this legal battle over tariffs will hit your wallet in one way or another.
-
Stocks Slide to Start September: Stock Market Today
Seasonal trends suggest tough times for the stock market as we round into the end of the third quarter.
-
If You'd Put $1,000 Into Sherwin-Williams Stock 20 Years Ago, Here's What You'd Have Today
Sherwin-Williams stock has clobbered the broader market by a wide margin for a long time.
-
9 Warren Buffett Quotes for Investors to Live By
Warren Buffett transformed Berkshire Hathaway from a struggling textile firm to a sprawling conglomerate and investment vehicle. Here's how he did it.
-
If You'd Put $1,000 Into UnitedHealth Group Stock 20 Years Ago, Here's What You'd Have Today
UNH stock was a massive market beater for ages — until it wasn't.
-
A Timeline of Warren Buffett's Life and Berkshire Hathaway
Buffett was the face of Berkshire Hathaway for 60 years. Here's a timeline of how he built the sprawling holding company and its outperforming equity portfolio.
-
Berkshire Buys the Dip on UnitedHealth Group Stock. Should You?
Buffett & Co. picked up UnitedHealth stock on the cheap, with the embattled blue chip one of the newest holdings in the Berkshire Hathaway equity portfolio.
-
What Set Warren Buffett Apart
As Warren Buffett prepares for retirement, we reflect on what we've learned from his 60 years of leadership at Berkshire Hathaway.
-
July CPI Report Ignites a Risk-On Rally: Stock Market Today
Market participants price out worst-case scenarios for tariffs and inflation and will now turn their attention to employment and growth.