Outlook 2024: A Turning Point, released in December 2023, featured our perspective on how stocks might respond to turning points in inflation and monetary policy.
Oil has entered a new uptrend after finally breaking out from nearly a year-long bottom formation. Support from OPEC+, notably Saudi Arabia’s one million barrel per day production cut for the remainder of the year, has been a major driver of the rally.
It’s a bull market for pessimism right now.
It’s a bull market for pessimism right now. We know the list of concerns is long and includes an aggressive Federal Reserve with a spotty (and that’s putting it kindly) track record of navigating a soft landing, stagflation, ongoing China lockdowns, disrupted supply chains, overly optimistic earnings estimates, the ongoing Russia-Ukraine war, and the latest—failing crypto firms.
Before we think about the hypothetical new world order that global inflation may enter, let’s start with the good news within the United States.
Headline inflation in May rose 8.6% from a year ago, accelerating from April’s 8.3% growth rate.
LPL Research looks at the May jobs report and its impact on markets and Federal Reserve (Fed) policy.
The near-10% correction in the S&P 500 Index and even larger drawdown in the Nasdaq have gotten a lot of attention this year.
Several policy-related risks loom in September and October that may lead to an increase in market volatility. The debt ceiling needs to be raised (likely by mid-October), the government needs to be funded to avoid a shutdown by the end of September...
More than most years, it’s hard to look ahead to the next year, to 2021, without looking back at 2020. A global pandemic, a massive economic collapse, a bear market, a surprisingly sharp reversal, a hotly contested election where passions ran high, the impact of lockdowns—it was an unusual year of extraordinary challenges.
At LPL Research, we know the stock market is forward-looking: It focuses on what’s happening today and what it sees on the path ahead. Much of the real-time economic data we follow—such as transportation activity, home sales, and jobless claims—is showing tangible evidence that economic activity—while still depressed—has begun to make a comeback.
This earnings season will be unlike any other, as travel restrictions and lockdowns related to COVID-19 have impacted results dramatically. The biggest economic hits came in mid-March, however, and won’t be fully captured in first quarter results.
A late month selloff in January saw the S&P 500 Index close marginally lower for the month. But stocks have taken off in February, with the S&P 500 up nearly 4% this month, as US economic data remains strong and fears over the worst-case scenarios for the coronavirus appear overblown.
The good news is August is finally coming to a close, but the bad news is that September is next. Since 1950, September has been the worst month for the S&P 500 Index, which has dropped an average of 0.5% during the month.
A closely watched point on the Treasury yield curve has fallen negative for the first time in this economic cycle.
We expect stocks to move higher over the second half of the year. Stocks already have had quite a run in 2019, buoyed by a return to fundamentals, with the S&P 500 Index up 17.4% year to date through June 28 for an 18.5% total return.
In today’s Weekly Market Commentary, we share our “Final Four Factors” for the stock market in 2019: policy, the economy, rates, and profits. While we expect a hard-fought battle between these factors and, with it, some market volatility, we still see the potential for further gains for stocks this year.
The S&P 500 Index is off to its best start in years, but this is on the heels of the worst year for stocks since 2008. The trifecta of crashing oil prices, confusion from the Federal Reserve (Fed), and trade issues with China all pushed equities lower by 14% during the usually bullish fourth quarter last year...
Investors’ obsession with the flattening U.S. Treasury yield curve dominated headlines for much of 2018. A flattening yield curve occurs when short-term rates are rising faster than long-term rates, which may eventually lead to an inverted yield curve, where short-term rates are higher than long-term rates. Historically, this has been a negative signal for the U.S. economy, often providing an early warning of an eventual recession, which is why the yield curve has been garnering so much attention recently.
Investors’ first look at third-quarter gross domestic product (GDP) will be released on Friday, October 26. Based on the economic data and projections we’ve seen, the economy grew at a moderate to strong pace in the third quarter, with the Bloomberg-surveyed economists’ consensus at 3.4%.
Given that we are in the later stages of this economic cycle, with factors such as increased trade tensions and geopolitical uncertainty at play, we do expect greater volatility may be ahead. But it’s important to remember that experiencing these ups and downs is a normal aspect of our market environment.
But should you sell in May this year? Maybe not, and here’s why: “If you subscribe to the old axiom, you should also note that the next six months (November 2018 through April 2019) have been the best performing six-month stretch of the presidential cycle.
The S&P 500 nine-quarter win streak has ended, with stocks down in a volatile first quarter. Bright spots in the quarter’s market performance included: growth, small caps, technology, consumer discretionary, and emerging markets. While risks remain, market fundamentals have not deteriorated and economic growth remains on pace.
Back to business: fundamentals to drive stock market gains in 2018. With a focus on business fundamentals and the impact of fiscal policy, the return of the business cycle means that earnings growth may have to shoulder most, if not all, of the load if stocks are going to produce attractive returns in 2018.
The steady bull market—now the second largest—continues. The Dow just had its third nine-day win streak of 2017, which hasn’t happened within a single year since 1955. Can the rally continue? While longer-term technicals do look very healthy, a closer look suggests that it has been a historically long time since even a modest correction, thus increasing the chances of a rise in volatility soon.
As investors increasingly trust that the economy can stand on its own without the need of monetary policy support, business fundamentals should take over as the primary market driver.
Thursday, May 25 was the 100th trading session of the year for the S&P 500 Index. Much like the first 100 days of a new presidency, this is a nice time to reflect on what has happened, what hasn’t happened, and what could happen next.
Checking in on some “Trump trades.” The election outcome and resulting expectations for fiscal policy have caused several shifts in market leadership toward areas most sensitive to these policies. Policy is not the only factor to consider when evaluating these investments, but it is a very important one.
Earnings are the key to 2017 stock market outlook. S&P 500 earnings passed an important milestone in 2016, returning to growth in the third quarter after mildly contracting for several quarters during an extended mid-cycle earnings recession.
In 2016, the U.S. economy navigated some difficult challenges including low oil prices, a strong dollar, tightening financial conditions, and the threat of deflation.
As the year winds down, our weekly commentaries have reviewed how 2016 forecasts played out, and we do the same this week with a review of fixed income.
This week we take a look back at some of our hits and misses of 2016. We certainly had some of both in a year that had some unusual macroeconomic drivers, including the impact of low oil prices at the beginning of the year on several sectors of the economy...
This week we take a look back at some of our hits and misses of 2016. We certainly had some of both in what was a difficult year to forecast the equity markets.
Surging bond yields have not spooked stock market investors. The latest sharp move higher in bond yields has caused stock market investors to ask the question, At what point do higher interest rates potentially begin to hurt stock prices?
Twenty years ago today, Federal Reserve (Fed) Chairman Alan Greenspan gave his now-famous “Irrational Exuberance” speech at a dinner hosted by the American Enterprise Institute.
Welcome to December. The year 2016 saw global turmoil in equity, credit, and energy markets in the initial months; a highly emotional U.S. presidential campaign and election; and a subsequent equity markets rally with various indexes at new all-time highs.
Corporate sentiment improved during the third quarter based on our analysis of earnings conference call transcripts for third quarter 2016 earnings season.
This week we preview the holiday shopping season. Although the market’s attention has been squarely on the election for the past several months, we should not forget how important this time of year is for the U.S. economy...
In a key speech last week (November 14 - 18, 2016), Janet Yellen, Chair of the Federal Reserve (Fed) testified before the Joint Economic Committee (JEC) of Congress, further preparing markets for a Fed rate hike as soon...
Small caps have been on fire, as the Russell 2000 has been up 10 consecutive days for the first time since March 2013.
This week we reflect on Donald Trump’s surprising victory and the stock market reaction.
The results of the November 8, 2016 U.S. presidential election have not changed our long-term outlook for the U.S. economy.
The transition to a Republican presidency and Trump’s rejection of politics as usual, which drew so many voters, naturally lead to questions about his impact on the economy and markets. Today on our blog we provide a high level overview of our thoughts of the significance of a Trump presidency.
With the S&P 500 down eight consecutive days for the first time since October 2008, many are wondering what this could mean for the rest of the year.
The Chinese yuan was added to the International Monetary Fund’s (IMF) basket of currencies, called Special Drawing Rights (SDR), on October 1, 2016.
It’s Halloween, so what else could we do but write about what might scare the markets?
With the election fast approaching, we present our election playbook. With Election Day just 15 days away, and the three presidential debates behind us, investors want to know what the upcoming change in power in Washington might mean for their portfolios.
Both presidential candidates have discussed energy independence as a goal for their administrations, though their actual platforms speak more to their broad policy orientations than to any real specifics.
We take a closer look at market technicals and sentiment this week with the historically volatile second half of October upon us. Although there has been some near-term volatility and equity weakness, the longer-term technicals on equities continue to look very strong.
Tomorrow is the 29-year anniversary of the crash of 1987. After the dust settled, the S&P 500 fell an incredible 20.5% on Monday, October 19, 1987, for the single worst day ever for the index – earning the well-deserved nickname Black Monday.
