During the quarter, equity markets experienced a strong rally after Election Day. The S&P 500 ended the year at 2,239—slightly below its record high. The direction of interest rates drove equity returns for most of the year, with lower rates in the first half and higher rates in the second. The Fed increased interest rates for only the second time in nine years, and additional increases are expected in 2017. There is speculation that many of the Trump administration’s promised initiatives could be a shot of adrenaline to an aging economic recovery. Corporate tax reform is a key agenda item for the markets, and investors have already priced in some level of reform. We continue to position portfolios for modest growth, although we expect volatility to reappear in 2017.
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