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Weekly Market Commentary
5/10/21 Amazing Earnings Season
It’s embarrassing to admit this but in our earnings season preview on April 12, when the consensus estimate reflected a nearly 24% increase, we wrote that S&P 500 Index earnings growth for the first quarter could potentially exceed 30%. Fast forward to today and earnings growth for the quarter is on pace to double—yes, double—that 24% growth rate, which would mark one of the biggest upside surprises ever recorded. Here we look at how corporate America produced such a blowout earnings season and what it could mean for the outlook.
Weekly Market Commentary
5/3/21 Time to Sell in May?
“Sell in May and go away” is probably the most widely cited stock market cliché in history. Every year a barrage of Wall Street commentaries, media stories, and investor questions flood in about the popular stock market adage. We tackle this commonly cited seasonal pattern and why some seasonal weakness could make sense in 2021.
Weekly Market Commentary
4/26/21 Is All the Good News Priced In?
Last week we discussed whether stock prices might be reflecting peak optimism. In that commentary we noted that while sentiment may be overly optimistic and a pickup in volatility would be totally normal, strong breadth measures suggest stocks still may have more upside. This week we tackle that same topic of peak optimism, but by looking at some valuation metrics. While valuations are elevated, they still appear reasonable when factoring in interest rates and inflation.
Earth Day 2021
4/22/21 Aligning with Sustainable Investing
On April 22, the world will mark the 51st Earth Day. This year’s theme will be Restore Our Earth. It represents a chance to learn about the environmental challenges we face today, ways to become more involved, and ways to align one’s personal choices in order to make a positive impact. You can do your part by investing in socially responsible (sustainable) funds. Contact us to find out how.
Weekly Market Commentary
4/19/21 PEAK OPTIMISM?
Global stock markets are off to a strong start in 2021 as the world begins to emerge from the shadow of the COVID-19 pandemic. In the United States, vaccinations are increasing, the economy is expanding, unemployment is falling, and stimulus continues to flow through the economy. With the consensus crowding into an optimistic corner, many investors are wondering if sentiment may be running too hot.
Weekly Market Commentary
4/12/21 THE EARNINGS BOOM IS HERE
The outstanding fourth-quarter earnings season we had in 2020 is a tough act to follow, but 2021’s first quarter has the makings of another potentially great earnings season. The reopening of the economy continues to move forward, and corporate America has done an excellent job managing through the pandemic. In fact, it won’t take much of an upside surprise for year-over-year S&P 500 Index earnings growth to reach 30% this quarter. The 2021 earnings boom is here.
Weekly Market Commentary
4/5/21 Raising Forecasts… Again
The U.S. economy’s recovery from the pandemic continues to surpass our expectations, aided by the accelerating vaccine distribution, massive stimulus, and America’s desire to resume some semblance of normal daily life. Despite having raised our 2021 economic and earnings growth forecasts on February 8, we are doing so again. We are also raising—and narrowing—our 10-year Treasury yield forecast range. Our S&P 500 Index target remains unchanged.
Weekly Market Commentary
3/29/21 Are We on the Brink of an Inflation Crisis?
There is a growing debate over whether an expanding economy, in conjunction with historic fiscal and monetary stimulus, may cause inflation to overheat. Adding to the intense debate, the Federal Reserve (Fed) has shifted its policy framework, potentially allowing inflation to run a little hotter than it has in the past. Despite vocal calls for runaway inflation, we believe that any uptick in inflation will ultimately prove transitory due to slack in the labor market and other structural forces.
Weekly Market Commentary
3/22/21 The Second Year of the Bull Market Begins
The bear market ended one year ago this week, finishing one of the fastest and most vicious bear markets of all-time—one that led to a drawdown of 34%. Things have come full circle now, as stocks have staged a furious rally, with new highs happening across the globe as the economy recovers at a record pace. We take a look back at what happened last March, while also examining how previous bull markets did during the second year of their existence.
Weekly Market Commentary
3/15/21 MARCH MADNESS: STOCK MARKET EDITION
With the NCAA college basketball tournament getting underway this week, LPL Research is getting in the spirit with its own version of March Madness. Here we share our “Final Four Factors” for the stock market in 2021: Vaccines, Policy, Profits, and Rates. While we see several strong competitors in this field, we believe the likely winner of this tournament is clear, and it will push stocks higher over the balance of the year.
Weekly Market Commentary
3/8/21 Rising Rates and Stock Market Performance
The 10-year Treasury yield continues to climb higher, but remains low by historical standards. Still, the size of the move since July 2020—and the more recent acceleration—has some market participants worried about the potential impact on stock markets if rates continue to rise. Historically, the S&P 500 Index has endured extended periods of rising rates well. If an improving growth outlook is part of what’s driving rates higher, it should also support corporate profits, creating a positive fundamental backdrop for stocks.
Weekly Market Commentary
Here Comes the Earnings Boom
Fourth-quarter earnings season is in the home stretch, and it’s been a good one. After raising our 2021 earnings forecast for the S&P 500 Index in our Weekly Market Commentary on February 8, our upgraded forecast may now be too low, based on what we have learned from corporate America during the three weeks since. In this commentary, we recap earnings season and share our latest thoughts on just how strong the earnings rebound could be in 2021 and beyond.
Weekly Market Commentary
2/22/21 Sustainable Investing Year in Review
Increasingly more people realize that their sustainability concerns can be addressed through their investments. As more investors embark on the sustainable investing journey—learn what it is, why one pursues it, and how to do it—assets into sustainable funds will continue and investors will have more choices from which to construct sustainable investing portfolios.
Weekly Market Commentary
2/16/21 The Search for Income
Interest rates have risen steadily over the past six months but remain low by historical standards. That means the traditional high-quality bonds that many of us owned for decades are not doing the job for investors looking for income, while the potential for interest rates have risen steadily in recent months brings more risk in the bond market than has been evident historically. Here we look at some income ideas that may help with these challenges.
Weekly Market Commentary
2/8/21 Raising GDP and Stock Market Forecasts
The resilience of the US economy continues to exceed our expectations. With encouraging progress toward ending the pandemic, and massive fiscal stimulus in place—and more likely coming soon, our prior economic growth forecasts may prove overly conservative. In addition, we believe a strong fourth quarter earnings season supports an increase in our earnings forecasts for 2021 and, in turn, our fair value S&P 500 target.
Weekly Market Commentary
2/1/21 MARKETS SHRUG OFF DEBT LEVELS
The level of US debt, already elevated before COVID-19 hit, skyrocketed as Congress put into place much needed fiscal stimulus in response to the pandemic, and it may jump again as the Biden administration targets its stimulus goals. Markets have seemed unfazed by fiscal stimulus measures, and they’ll likely stay that way at least through 2021, but there will likely be economic consequences in the long term.
Weekly Market Commentary
1/25/21 Small Caps Still Solid
Small caps have had an incredible run since the Russell 2000 Index bottomed on March 18, 2020, returning 119% compared to the S&P 500 Index’s 60% return over the period. Will small cap outperformance continue in 2021? The early stages of this business cycle may help determine the direction for small caps as well as earnings per share, stock valuations, and technical trends.