Weekly Market Commentary

10/4/22 Early Thoughts on 2022

Jeffrey Buchbinder, CFA, Equity Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial

With the fourth quarter underway—historically the best quarter for stocks, by the way—2022 is fast approaching. While a lot can still happen between now and the end of 2021, we don’t think it’s too early to start thinking about what stocks might do next year. We see a favorable economic environment for stocks in 2022, consistent with prior mid-cycle expansion years and bolstered by continued earnings growth. The gains may not come easy, however, with a number of risks such as COVID-19-related supply chain disruptions, inflation, and higher interest rates.

Weekly Market Commentary

9/27/21 To Z or Not to Z: Why the Shape of Recovery Still Matters

Barry Gilbert, PhD, CFA, Asset Allocation Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial
Jeff Buchbinder, CFA, Equity Strategist, LPL Financial

LPL Research is downgrading its 2021 U.S. GDP growth forecast from 6.25–6.75% to 5.75–6.25%. Growth is likely to come in at an annualized pace near 5% over the second half of the year. So, while expectations have been tempered, the recovery still has a lot of momentum, which is likely to extend well into 2022. In 2022 we may see economic growth exceed potential, creating a Z-shaped recovery— something we haven’t really seen since the early 1970s. What is a Z-shaped recovery and what might it mean for the Federal Reserve (Fed), inflation, and markets? We attempt to answer those questions in this week’s commentary.

Weekly Market Commentary

9/20/21 REVISITING OUR 10-YEAR TREASURY YIELD FORECAST

Lawrence Gillum, CFA, Fixed Income Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial

Until recently, we expected the 10-year Treasury yield to end the year between 1.75% and 2.0%. Now, however, there are two key elements suggesting we are unlikely to see significantly higher interest rates by year end: The Delta variant’s impact on economic growth expectations, and the continued demand for U.S. Treasuries by foreign investors. As such, our new year-end target for the 10-year Treasury yield is between 1.50% and 1.75%.

Weekly Market Commentary

9/13/21 POLICY RISKS LOOM BUT CLARITY AHEAD

Barry Gilbert, PhD, CFA, Asset Allocation Strategist, LPL Financial
Lawrence Gillum, CFA, Fixed Income Strategist, LPL Financial
Jeff Buchbinder, CFA, Equity Strategist, LPL Financial

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, and the Democrats are trying to pass two major spending bills and will need to provide greater clarity on tax increases over the next several weeks. We believe the greatest risks come from the debt ceiling and taxes, but expect neither to have much near-term impact on the general trajectory of the bull market.

Weekly Market Commentary

8/30/21 Poking the Bear

Ryan Detrick, CMT, Chief Market Strategist, LPL Financial
Jeffrey Buchbinder, CFA, Equity Strategist, LPL Financial
Scott Brown, CMT, Senior Analyst, LPL Financial

First and foremost, this week’s commentary should not be construed to suggest that we are saying stocks will go up forever. We are also not saying that stocks are immune from a pullback in the final four months of 2021. Corrections are a normal part of investing and the S&P 500 Index has yet to pull back even 5% so far this year, something that happens on average three times per year. However, we remain steadfastly bullish and this week want to explore five things that some bears believe that do not worry us.

Weekly Market Commentary

8/23/21 WHY STAGFLATION ISN’T IN THE CARDS

Jeffrey Buchbinder, CFA, Equity Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial
Scott Brown, CMT, Senior Analyst, LPL Financial

The term stagflation has been circulating increasingly in the financial media as inflation readings have risen sharply in recent months. The term is often associated with the 1970s, which saw runaway inflation—largely driven by sky-high energy prices—and lackluster economic growth. Stagflation and a return to the weak equity markets of the 1970s would be understandably scary. However, when looking at the data, we remain skeptical that either runaway inflation or low growth are right around the corner, much less both at the same time.

Weekly Market Commentary

8/16/21 Corporate America Does It Again

Jeffrey Buchbinder, CFA, Equity Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial

Corporate America did it again. Companies blew by estimates and made strategists and analysts look silly (though we humbly suggest that we may have looked less silly than most in our earnings preview on July 12). S&P 500 earnings growth did not surprise by quite as much as in the first quarter, but came pretty close—boosted by the biggest quarterly upside revenue surprise in at least 13 years. Here, we recap the strong numbers and raise our forecasts for earnings and for S&P 500 fair value at year-end.

Weekly Market Commentary

8/9/21 COVID UPDATE: DELTA VARIANT MARKET IMPACT

Barry Gilbert, PhD, CFA, Asset Allocation Strategist, LPL Financial

The highly transmissible Delta variant of COVID-19 now makes up an overwhelming majority of the new cases in the U.S., bringing with it a rise in cases and hospitalizations. Widespread vaccine distribution and distancing measures have helped limit the variant’s impact, but we could still see some drag on economic growth as some restrictions are reintroduced and consumers potentially become more cautious. While we may see an increase in market volatility due to the Delta variant, we believe the S&P 500 is still likely to see more gains through the end of the year.

Weekly Market Commentary

8/2/21 FIVE THINGS TO KNOW HEADING INTO AUGUST

Ryan Detrick, CMT, Chief Market Strategist, LPL Financial
Jeff Buchbinder, CFA, Equity Strategist, LPL Financial
Barry Gilbert, CFA, Asset Allocation Strategist, LPL Financial

Last week was a huge news week, from the Fed, to gross domestic product (GDP), to a giant week of earnings reports. In this commentary we review the big events from last week, while also looking ahead to what could be an eventful August for investors.

Weekly Market Commentary

7/26/21 SIX SURPRISES SO FAR IN 2021

Ryan Detrick, CMT, Chief Market Strategist, LPL Financial
Jeff Buchbinder, CFA, Equity Strategist, LPL Financial
Thomas Goulder, CFA, Senior Analyst, LPL Financial

2021 has been a very strong year for both stocks and the economy, but that doesn’t mean there haven’t been some surprises. In this commentary, we take a look at some things that have happened so far in 2021 that have surprised the LPL Research team.

Weekly Market Commentary

7/19/21 MIDYEAR OUTLOOK 2021: PICKING UP SPEED

Ryan Detrick, CMT, Chief Market Strategist, LPL Financial
Jeff Buchbinder, CFA, Equity Strategist, LPL Financial
Scott Brown, CMT, Senior Analyst, LPL Financial

It is hard to believe we have passed the halfway point of 2021. After a 2020 that would never end, the first six months of 2021 flew by. With the second half underway, we have updated our views of the markets and economy in our Midyear Outlook 2021: Picking up Speed Webinar on 8/3 @ 12:00pm PST. In this commentary, we provide a summary of those expectations covering the economy, policy, stocks and bonds.

Weekly Market Commentary

7/12/21 Three Things to Watch This Earnings Season

Jeffrey Buchbinder, CFA, Equity Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial

We ran out of superlatives to describe corporate America’s stunning performance during first-quarter earnings season. Despite lofty expectations, results exceeded those by one of the biggest margins ever. So what will companies do for an encore? We expect more good news this quarter as more of the economy has opened up, while also acknowledging the second quarter will almost certainly end up being the peak in earnings growth for this cycle. Here, we highlight what to watch.

Weekly Market Commentary

6/28/21 Three Things That Worry Us

Ryan Detrick, CMT, Chief Market Strategist, LPL Financial
Jeff Buchbinder, CFA, Equity Strategist, LPL Financial
Scott Brown, CMT, Senior Analyst, LPL Financial

Markets are off to a strong start this year, with the S&P 500 Index up about 14% so far. However, most of those gains came early in the year, and many stocks have stagnated over recent months. While we remain overweight on stocks relative to bonds, this week we explore three things that worry us—and could make the market more susceptible to a pullback as we enter the second half of 2021.

Weekly Market Commentary

6/21/21 Inflation and What the Fed is Saying

Barry Gilbert, PhD, CFA, Asset Allocation Strategist, LPL Financial
Lawrence Gillum, CFA, Fixed Income Strategist, LPL Financial

Inflation has been on the rise. Investors are not as interested in what’s happening now as they are in what’s happening next. Meanwhile, the Federal Reserve (Fed) shared its views at the conclusion of its last policy meeting on Wednesday, June 16. And while the Fed’s position that inflation is likely to be transitory has become stronger, not weaker, Fed members have seemingly different opinions on the future path of monetary support.

Weekly Market Commentary

6/14/21 Sustainable Investing Becoming Mainstream in Fixed Income

Jason Hoody, CFA, Head of Sustainable Investing, LPL Financial
Lawrence Gillum, CFA, Fixed Income Strategist, LPL Financia

On May 27, 2021, a couple of events in the energy sector occurred that demonstrated the continued mainstreaming of sustainable investing and underscored the risks and opportunities available to investors. While primarily thought of as equity-oriented, sustainable investing is becoming more mainstream in fixed income markets—and companies that fail to acknowledge changing dynamics may potentially face financially material impacts.

Weekly Market Commentary

6/7/21 POLICY SHIFTS MAY CHALLENGE MARKETS

Barry Gilbert, PhD, CFA, Asset Allocation Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial

Fiscal stimulus, which was central to the market rebound in the last year, may start moving to the sidelines over the rest of 2021 and into 2022 as the recovery continues. Economic growth can compensate for the loss of government checks to households and businesses, but potential tax increases may be more challenging for markets to navigate. Business tax increases, in particular, may gradually pull gains out of markets about equal to their size, but with economic growth supporting corporate earnings, we believe a positive backdrop for equities remains in place.

Weekly Market Commentary

6/1/21 PROCEED WITH CAUTION IN THE BOND MARKET

Lawrence Gillum, CFA, Fixed Income Strategist, LPL Financial

Ryan Detrick, CMT, Chief Market Strategist, LPL Financial

After one of the worst starts to a year for fixed income, returns may not get much better from here. Long-term interest rates have traded sideways recently but we expect rates to potentially rise further, which would put downward pressure on bond prices. We’re not giving up on high-quality fixed income though, as Treasury securities have shown to be the best diversifier during times of equity market stresses.

Good News for Good Grandparents

Why Grandparents Now Have Greater Incentive to Start 529 Accounts for Their Grandkids

Grandparent owned 529 college savings accounts will no longer be included in determining student Financial Aid as of 2023.

Weekly Market Commentary

5/24/21 STOCK MARKET GAINS LIKELY TO SLOW

Jeffrey Buchbinder, CFA, Equity Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial

After one of the best starts to a bull market in history, the rally has started to show signs of fatigue. A strong economic recovery lies ahead as the re-opening continues, bolstering a very strong earnings outlook that is helping stocks grow into elevated valuations. However, in the second half of the year, as inflationary pressures build, interest rates potentially rise further, and this bull market gets a little older, the pace of stock market gains will likely slow and come with more volatility.

Weekly Market Commentary

5/17/21 ECONOMY PICKING UP SPEED

The economic recovery continues, as the recipe of vaccines, the reopening, and record stimulus all have combined to produce what should be one of the best years for growth ever. Although some economic indicators could be peaking or about to peak, the stage is set for this cycle of growth to continue for many years, which may surprise some investors. We discuss why inflation might be in the headlines, but still shouldn’t be a major worry for investors.