Each week the LPL Financial Research team assembles thoughtful insight on market news. Get stock market updates from top LPL Financial research strategists. Stay up-to-date on financial market trends and understand stock market predictions.

Weekly Market Commentary

Earnings Are Doing Their Part

May 28, 2024   |   LPL Research
______________________________________

The first quarter earnings season is largely in the books, and it was excellent. In fact, S&P 500 earnings per share (EPS) would have been up double digits in the quarter if not for a big loss Bristol Myers Squibb (BMY) absorbed in an acquisition.

Learn more

Preferred Securities: Still Our Preferred Non-Core Bond Sector 

May 13, 2024   |   LPL Research
______________________________________

It continues to be a challenging environment for a lot of fixed income markets, especially higher quality markets. With the Federal Reserve (Fed) seemingly unlikely to lower interest rates until after the summer months (at the earliest), the “higher for longer” narrative has kept a lid on any sort of bond market rally.

Learn more

Sell In May? Maybe Not 

May 6, 2024   |   LPL Research
______________________________________

“Sell in May and Go Away” is one of the most widely used maxims on Wall Street. There is no shortage of financial media coverage on this topic as the calendar turns to May. However, this phrase may be more rhyme than reason, as stocks tend to trade higher during this period (especially more recently), subject to potentially elevated volatility.

Learn more

That Was Quite a Week 

April 29, 2024   |   LPL Research
______________________________________

Last week was a pivotal one for markets, with the S&P 500 coming off a 3% weekly decline the week before. In terms of economic data, we got our first look at first quarter gross domestic product (GDP) as well as the March reading of the Federal Reserve’s (Fed) favorite inflation measure — the core PCE deflator.

Learn more

The Ever-Changing Market Narrative

April 22, 2024   |   LPL Research
______________________________________

Volatility has come back into the market as the narrative shifted toward a higher-for-longer monetary policy backdrop. Signs of sticky inflation and a resilient economy, including a strong labor market, have underpinned the change in expectations.

Learn more

Revisiting Energy

April 15, 2024   |   LPL Research
______________________________________

As the first quarter earnings season kicked off on April 12, expectations for the energy sector were decidedly negative. That low bar has tempted analysts to forecast a series of positive surprises as recent data releases for both the U.S. and China suggest a stronger economic underpinning, and the manufacturing sector appears to have bottomed in both countries

Learn more

IPOs as a Market Tell 

April 1, 2024   |   LPL Research
______________________________________

The initial public offering (IPO) market allows institutional investors to incorporate the macroeconomic landscape with individual corporate earnings data — and future earnings forecasts — to ascertain a share price that will hold up to analyst and media scrutiny coupled with overall market dynamics.

Learn more

Navigating the Strategic Investing Landscape

March 25, 2024   |   LPL Research
______________________________________

The difference between strategic and tactical investment time horizons can be likened to the ebb and flow of tidal patterns in oceans. Strategic investing mirrors the steady rise and fall of the tides, focusing on long-term goals and expectations more stable akin to the predictable rhythm of oceans. 

Learn more

A Busy (and Perhaps Historic) Week for Central Banks 

March 18, 2024   |   LPL Research
______________________________________

It seems like we just can’t stop talking about central banks. And this week will be no different, with at least 15 central bank meetings planned, some more important than others, of course. While the Federal Reserve (Fed) meeting will likely take top billing in the financial media, it’s the Bank of Japan (BOJ) meeting on Tuesday that could be the real game changer. 

Learn more

Gold Shines Brighter Than Ever  

March 11, 2024   |   LPL Research
______________________________________

Bullion broke new ground last week after rallying to a record high. Growing investor confidence for a Federal Reserve (Fed) rate cut by this summer dragged down yields and the dollar, creating a tailwind for gold. The breakout above key resistance at $2,075 was also a major technical development, confirmed by bullish momentum that suggests the rally could continue.

Learn more

Super Six Drives Solid Earnings Season 

March 4, 2024   |   LPL Research
______________________________________

Fourth quarter earnings season is winding down with only about a dozen companies in the S&P 500 left to report. After a slow start mired by messy bank results early on, corporate America picked up the pace and ended up delivering results well ahead of expectations. The “Super Six” was part of the story — the Magnificent Seven minus Tesla (TSLA) — but resilient profit margins are also noteworthy. Here we review fourth quarter earnings season and share some thoughts on the earnings outlook for 2024.

Learn more

Buybacks Are Back

February 26, 2024   |   LPL Research
______________________________________

After a brief lull in 2023, buyback activity appears to be back this year. A resilient U.S. economy, easing inflation pressures, and expectations for an eventual shift to interest rate cuts have given corporate America confidence to boost authorized share repurchases. These companies have a history of outperforming the broader market and tend to have more exposure to momentum, value, and growth factors. While buybacks also reduce share count and help support earnings growth and valuations, they can also help limit downside volatility during periods of selling pressure. 

Learn more

Treasuries: Who's Buying and Why It Matters

February 20, 2024   |   LPL Research
______________________________________

As the Federal Reserve (Fed) continues with its Quantitative Tightening (QT) program, questions abound regarding the Treasury Department’s expanding funding needs. The QT program is designed to reduce the Fed’s balance sheet — now $7.7 trillion down from $9 trillion — after Treasury notes (mostly) were bought after economic concerns intensified during the COVID-19-related pandemic. Households and, perhaps surprisingly, foreign investors have been buyers recently, and with the amount of Treasury supply coming to market, both will need to keep buying.

Learn more

Outlook for U.S. Economy Continues to Brighten

February 12, 2024   |   LPL Research
______________________________________

When we wrote the annual outlook last November, the data was mixed. Some metrics hinted at emerging cracks in the economy while others suggested the growth trajectory in capital markets and the economy had legs. So, the variety of the data produced the narrative that business activity in the New Year would grow on an annual basis but experience some bumps in the first half of the year. Now, enter the revisions.

Learn more

Will The January Barometer Come Through?

February 5, 2024   |   LPL Research
______________________________________

A positive January has historically been a bullish sign for stocks. Yale Hirsch, creator of the “Stock Trader’s Almanac”, first discovered this seasonal pattern back in 1972, which he called the January
Barometer and coined its popular tagline of ‘As goes January, so goes this year.’ Here, we assess the likelihood that this popular stock market adage delivers more gains for investors this year. The weight of the evidence leans toward yes, as we explain.

Learn more

Is Too Much Optimism Priced In? 

January 29, 2024   |   LPL Research
______________________________________

With the S&P 500 having recently ascended to a fresh record high after such a strong 2023, it’s natural for investors to worry that valuations have become over-extended. On traditional valuation measures, valuations do appear high and it does seem reasonable to expect more moderate stock market returns going forward. Here we walk through several different stock valuation approaches to get a more complete picture and even make the case that they aren’t as pricey as they look.

Learn more

Will Shipping Disruptions Alter Fed Plans?

January 22, 2024   |   LPL Research
______________________________________

Shipping disruptions in the Red Sea could temporarily impact goods prices but not at the same magnitude as during the pandemic. Tight financial conditions, slowing economic growth, and a disinflationary trend all support the Federal Reserve’s (Fed) pivot away from tightening monetary policy to easing in the new year. Despite these longer term trends, rates possibly got ahead of themselves in recent weeks, exhibiting higher volatility. 

Learn more

Magnificent Seven and Margins are Keys to Q4 Earnings Season

January 16, 2024   |   LPL Research
______________________________________

Fourth quarter earnings season kicked off last week, and markets were generally left wanting more. That doesn’t necessarily mean this earnings season will be disappointing, especially considering the bar has been lowered so much. 

Learn more

China 2024 Faces Demanding Challenges

January 8, 2024   |   LPL Research
______________________________________

As China emerged a year ago from the shadow of the stringent zero COVID-19-related measures thatall but shut down its economy for over two years, much was expected in terms of its economic growthprospects. There were numerous reports suggesting the world’s second largest economy would ignite a bout of inflation as its industrial base would require vast quantities of commodities to power a newly energized China. Clearly that didn’t happen. Here we explore why and provide our updated thoughts on investing in China and emerging markets. 

Learn more

Lessons Learned in 2023: “This Time Is Different” in Post-Pandemic Economy

January 2, 2024   |   LPL Research
______________________________________

To say 2023 was challenging may be an understatement. While stocks had a surprisingly impressive year, there was no shortage of obstacles for investors to overcome, including historic interest rate volatility, recession risk, banking sector turmoil, and a game of monetary policy chicken played between the markets and the Federal Reserve (Fed). LPL Research had some wins and some losses as the market delivered its usual dose of humility to us and many market participants. In an effort to maintain accountability and learn from our mistakes (and hopefully not repeat them), we are starting the new year with our traditional lessons learned commentary.

Learn more

Key Equity Themes Underlying U.S. Stock Market Outlook for 2024 

December 18, 2023   |   LPL Research
______________________________________

Following the Federal Reserve’s (Fed) aggressive rate-hiking campaign in 2022 and 2023, stocks are entering a phase in which the market narrative is focused on interest-rate stability — as inflation, we believe, comes down further. Low and stable interest rates should help support stock valuations, while corporate profits are moving into a sweet spot. So even though stocks look fully valued, if rates ease as we expect, we could see upside to our year-end 2024 fair-value target range of 4,850 to 4,950. We highlight some key themes for stocks next year.

Learn more

Discord in the OPEC+ Oil Patch

December 11, 2023   |   LPL Research
______________________________________

Despite a heavy lobbying effort to cajole OPEC+ members to agree to a unified cut in oil production, Saudi Arabia, the de facto leader of the energy cartel, was unable to orchestrate anything more than pledges on a “voluntary” basis. Accordingly, benchmark oil prices continued to slide lower following the announcement, and without a catalyst to propel prices higher, oversupply in the market coupled with concerns over the global economic landscape, have steadfastly kept prices lower.

Learn more

Market Opportunities Amid An Economic Rotation

December 4, 2023   |   LPL Research
______________________________________

Opportunities abound in the markets, even during periods when the economy appears ripe for a regime shift. Recent growth metrics surprised to the upside, but leading indicators point toward some downside risk. In this edition of the Weekly Market Commentary, we examine potential opportunities amid a rotation in housing, buying patterns, and inflation.

Learn more

Anatomy of a Market Rally: Looking at Key Catalysts

November 20, 2023   |   LPL Research
______________________________________

As the market appears to be taking a rest and consolidating its $2.7 trillion rally leading up to the Thanksgiving holiday, the historical pattern over the last five years suggests the shortened holiday week typically enjoys modest gains.

Learn more

Is the Stock Market Correction Over?

November 13, 2023   |   LPL Research
______________________________________

There is nothing like an eight-day winning streak to change the market narrative. Stocks have quickly gone from a correction to a comeback this month, and the S&P 500 is now challenging key resistance at 4,400. 

Learn more

Can Muni Investors Catch a Break? We Think So

November 6, 2023   |   LPL Research
______________________________________

It’s been another volatile year for municipal (muni) investors this year. While generally outperforming U.S. Treasuries, the Bloomberg Muni Index is on track for its second calendar year of negative returns—something that has never happened before. But, while volatility will likely persist over the coming months, we think muni investors may be able to catch a break, especially if the Federal Reserve (Fed) is done with its aggressive rate hiking campaign.

Learn more

Possible Halloween Scares for Markets and the Economy

October 30, 2023   |   LPL Research
______________________________________

It’s a tradition here to write about what scares us around Halloween each year. The past few years have offered plenty of material to use in these annual commentaries, but with wars in Israel and Ukraine ongoing, Washington, D.C. dysfunction reaching new heights, the unrelenting rise in interest rates, still-high inflation, unaffordable housing, tight financial conditions, and a Federal Reserve (Fed) that has not yet signaled it’s done hiking rates, the list seems to be a bit longer and scarier than it usually is. But these are risk factors, not our base case. Keep in mind there are plenty of positives at the same time, including easing inflation, the resilient economy bolstered by a healthy job market, growing earnings, and the strong possibility that the Fed is done hiking rates.

Learn more

Economic Impact: Can Something Good Come from a Crisis?

October 23, 2023   |   LPL Research
______________________________________

Despite headwinds, the U.S. could experience structural changes in the labor market, residential real estate, and inflation as the post-pandemic economy progresses into the New Year. As markets adjust to a new regime, investors should recognize the economy is becoming less interest rate sensitive and they should focus on leading indicators such as the ratio of part-time workers and not on lagging metrics such as the headline growth stats mostly cited in the media.

Learn more

Earnings Hope to Keep This One-Year-Old Bull Market Going

October 16, 2023   |   LPL Research
______________________________________

Earnings season has kicked off with several of the big banks and a handful of other blue-chip companies having already reported results for their calendar third quarters. The key headline this reporting season will be the (likely) end of the earnings recession. The October-November reporting season can be particularly interesting because full-year numbers are nearly locked in while more companies share thoughts on the year ahead. 

Learn more

Yields Higher for Longer: Why We’re Updating Our Treasury Forecast

October 9, 2023   |   LPL Research
______________________________________

U.S. Treasury yields have seemingly been moving in one direction lately (higher), with the 30-year Treasury yield temporarily breaching 5% for the first time since 2007. The move higher in yields (lower in price) has been unrelenting, with intermediate and longer-term Treasury yields bearing the brunt of the move. 

Learn more

Prospects for a Fourth Quarter Rally

October 2, 2023   |   LPL Research
______________________________________

After a difficult September for stocks, investors are surely ready to flip the calendar to October. That’s the month that kicks off the historically strong fourth quarter. Expecting this pattern to repeat this year is tricky given the overhang of a government shutdown, interest rates near 16-year highs, a market still trying to digest the Federal Reserve’s “higher for longer” message, and a consumer who is facing some stiff headwinds as excess savings are drawn down, student loan payments restart, and the effects of higher borrowing costs are increasingly felt. Amid that complicated backdrop, here we assess prospects for a fourth-quarter rally. 

Learn more

Is India Surpassing China to Become the Next Superpower?

September 25, 2023   |   LPL Research
______________________________________

India has emerged as a compelling economic growth story and an increasingly attractive alternative to China within the emerging markets complex. A growing population with a robust and young workforce, significant infrastructure spending, and an ongoing digital transformation have been key catalysts to India’s outperformance over China. India has also benefited from the de-globalization trend as manufacturers move production away from China. While we may not go as far as officially calling India the new China, the economic and technical trends suggest the country may be set for a prolonged period of outperformance.

Learn more