Weekly Market Commentary

11/21/22 PLAYBOOK FOR A FED PIVOT

Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial
Marc Zabicki, CFA, Chief Investment Officer, LPL Financial 

Recent inflation data has tempered expectations for future Federal Reserve tightening, including a potential peak in the terminal rate near 5.0% in May or June of 2023. While the market has welcomed this news, history suggests the path to a Fed pivot could be volatile for stocks due to elevated inflation and interest rate risk. In this week’s Weekly Market Commentary, we explore historical equity and fixed income market performance surrounding a Fed pivot, including the prospect for solid stock performance in the back half of 2023. 

Weekly Market Commentary

11/21/22 PLAYBOOK FOR A FED PIVOT

Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial
Marc Zabicki, CFA, Chief Investment Officer, LPL Financial 

Recent inflation data has tempered expectations for future Federal Reserve tightening, including a potential peak in the terminal rate near 5.0% in May or June of 2023. While the market has welcomed this news, history suggests the path to a Fed pivot could be volatile for stocks due to elevated inflation and interest rate risk. In this week’s Weekly Market Commentary, we explore historical equity and fixed income market performance surrounding a Fed pivot, including the prospect for solid stock performance in the back half of 2023. 

Weekly Market Commentary

11/14/22 HIGH INFLATION AND RISING RATES SUPPORTED VALUE IN 2022

Thomas Shipp, CFA, Quantitative Equity Analyst, LPL Financial
Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial 

The growth vs. value debate has been pretty one-sided in 2022, with value outperforming growth for a sustained period for the first time in almost 15 years. However, the debate is heating up as investors begin to consider whether the pendulum will swing back to growth if inflation and interest rates decline in 2023. In this week’s Weekly Market Commentary we look at the factors driving value’s 2022 outperformance, the technical trading setup for growth and value, and what to look for in the coming months. 

Weekly Market Commentary

11/7/22 HOW MIDTERM ELECTIONS MAY MOVE MARKETS

Barry Gilbert, PhD, CFA, Asset Allocation Strategist, LPL Financial
Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial 

Midterm elections are upon us, with Election Day on Tuesday. Republicans are strongly favored to win the House, and the Senate is roughly a tossup. We believe either outcome would be market-friendly, although the bigger market driver will likely be central banks’ efforts to tame inflation. In this week’s Weekly Market Commentary, we look at why the stock market may respond favorably to the midterm election, whatever the outcome. 

Weekly Market Commentary

10/31/22 FEDERAL RESERVE PREVIEW: TRICK OR TREAT?

Lawrence Gillum, CFA, Fixed Income Strategist, LPL Financial
Quincy Krosby, Ph.D., Chief Global Strategist, LPL Financial
Jeffrey Roach, Ph.D., Chief Economist, LPL Financial 

With a series of important economic indicators suggesting the economy is declining and inflation is finally decelerating, albeit very slowly, markets are beginning to factor in that the Fed may soon transition to a less aggressive stance in early 2023. We preview this week’s Fed meeting and discuss whether investors will get a trick or a treat. 

Weekly Market Commentary

10/24/22 THREE THINGS TO KNOW ABOUT RECESSIONS

Jeffrey Roach, PhD, Chief Economist, LPL Financial 

If the U.S. economy enters a recession, the causes and potential outcome will be hotly debated. At LPL Research, our starting point is always looking at history. This week’s commentary will remind us of three things we know about historical recessions. 

Weekly Market Commentary

10/17/22 LOW BAR FOR EARNINGS SEASON

Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial 

Expectations are very low for this earnings season. The challenges are many, with intense cost pressures and slowing economic growth at the top of the list. The chorus of analysts and strategists calling for big cuts to estimates has gotten louder. Expect estimates to come down, but not collapse. We take a look at whether expectations are low enough as we preview third quarter earnings season. 

Weekly Market Commentary

10/10/22 POCKETS OF VULNERABILITIES

Quincy Krosby, Ph.D. Chief Global Strategist, LPL Financial
George Smith, CFA, CAIA, CIPM, Portfolio Strategist, LPL Financial 

As Federal Reserve (Fed) officials continue to emphasize the Fed’s commitment towards restoring price stability, the dollar marches ever higher. Markets are currently pricing in another 75-basis point rate hike at the November 2 Fed meeting as calls for the Fed to halt its aggressive campaign are mounting. Worries persist that tightening financial conditions, underpinned by a stronger dollar, will lead to deeper cracks within the global financial system. 

Weekly Market Commentary

10/3/22 MARKETS ON WATCH AS XI JINPING’S INFLUENCE TO BE TESTED IN OCTOBER

Quincy Krosby, Ph.D., Chief Global Strategist, LPL Financial 

On October 16, China will begin its 20th National Congress of the Chinese Communist Party in Beijing. This plenum is especially significant because it is expected that President Xi Jinping will be granted an unprecedented third term, something that he set in motion in 2018 when term limits were abolished. 

Weekly Market Commentary

9/26/22 TAKING ADVANTAGE OF HIGHER YIELDS

Lawrence Gillum, CFA, Fixed Income Strategist, LPL Financial
Josh Whitmore, CFA, Sr. Fixed Income Analyst, LPL Financial 

The LPL Research Strategic and Tactical Asset Allocation Committee is increasing its recommended interest rate exposure in its tactical allocation from underweight to neutral. Now that interest rates have moved substantially higher, we believe opportunities in fixed income have improved and are looking to add back to certain areas within fixed income that may benefit. 

Weekly Market Commentary

9/19/22 HOW MUCH HIGHER CAN RATES GO?

Lawrence Gillum, CFA, Fixed Income Strategist, LPL Financial 

Inflationary dynamics continue to surprise to the upside, and markets now expect the Fed to pursue one of its most aggressive rate hiking campaign in years. U.S. Treasury yields continue to move higher as well. We think we’ve seen the biggest moves higher in yields, but as long as inflationary pressures continue to surprise to the upside, interest rate volatility will likely remain. We still think the 10-year Treasury yield can end the year between 2.75%-3.25%, but we acknowledge there are risks to the upside. 

Weekly Market Commentary

9/12/22 GETTING JOBS MARKET BACK INTO BALANCE

Jeffrey Roach, PhD, Chief Economist, LPL Financial 

Federal Reserve Chairman Jay Powell reiterated his warning that getting inflation under control will require some pain. Powell is likely making these warnings based on the arcane, clunky relationship between inflation and unemployment. The key to getting the market back into balance is a bigger labor force, and the economy is starting to experience a larger labor force as individuals come off the sidelines and rejoin the job market. 

Weekly Market Commentary

9/6/22 CALENDAR CRUELTY

Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial
Barry Gilbert, PhD, CFA, Asset Allocation Strategist, LPL Financial
Jeffrey Roach, PhD, Chief Economist, LPL Financial 

The difficult 2022 for stocks may not get much easier because as we now wait for better news on the inflation front, we have to contend with a seasonally weak month of September. While we got some welcome news in Friday’s jobs report, more evidence of falling inflation will take time to materialize. The good news is a seasonally strong fourth quarter is right around the corner. If history is a guide, midterm elections may provide an added late-year boost. 

Weekly Market Commentary

8/29/22 EARNINGS RECAP: STILL HANGING IN THERE

Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial 

Earnings growth of 6-7% doesn’t sound very exciting, but given the challenges corporate America has faced, we consider the nearly-complete second quarter earnings season a resounding success. The numerous challenges last quarter included a slowing economy, intensifying inflation pressures, ongoing global supply chain disruptions, and a surging U.S. dollar. Still, corporate America delivered the type of upside investors have grown accustomed to in much easier economic environments. 

Weekly Market Commentary

8/22/22 WHERE WILL HOUSING GO FROM HERE?

Jeffrey Roach, PhD, Chief Economist, LPL Financial
Marc Zabicki, CFA, Chief Investment Officer and Director of Research, LPL Financial 

Existing home sales fell 5.9% in July, the sixth consecutive month of declines as higher interest rates weigh on housing affordability and prospective buyers. As the housing market slowed, so did prices. The median price for a single family home was $410,600, a decline of roughly $10,000 from June. However, homes do not stay on the market long. Over the last two months, homes were on the market for an average of only 14 days, three days shorter than a year ago. 

Weekly Market Commentary

8/15/22 START OF A NEW BULL MARKET?

Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial
George Smith, CFA, CAIA, CIPM, Portfolio Strategist, LPL Financial 

Investors cheered the two better-than-expected inflation reports last week, pushing the S&P 500 to 16% above its June 16 low and only 11% below its all-time high. After this rebound, the key question investors are asking is whether this is a bear market rally that will soon fizzle or the start of a new bull market. There’s too much uncertainty to have a high conviction view right now, but we do believe the odds have risen that a new bull market has begun. 

Weekly Market Commentary

8/8/22 CASE FOR RECESSION WEAKENS

Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial
Jeffrey Roach, PhD, Chief Economist, LPL Financial 

The market pundits remain intensely focused on the question of whether the U.S. economy is in or about to enter recession, so we thought a piece on what a recession might mean for the stock market would be of interest. While Friday’s strong jobs report provides more evidence that the U.S. economy is not currently in recession, odds are still perhaps a coin flip or better that one may come in the next year. We update changing recession prospects and what that might mean for stocks. 

Weekly Market Commentary

8/1/22 WHAT A WEEK

Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial
Jeffrey Roach, PhD, Chief Economist, LPL Financial
Lawrence Gillum, CFA, Fixed Income Strategist, LPL Financial 

That was quite a week. These days a Federal Reserve (Fed) policy meeting alone gets a lot of headlines and has market participants on the edge of their seats. Add to that the second straight quarter of negative gross domestic product (GDP) growth that exacerbated recession fears, the busiest week of earnings season, and important but sometimes under-the-radar inflation data, and last week was epic for market watchers. Here’s the good news: Markets liked it. 

Weekly Market Commentary

7/25/22 THREE FACTORS THAT COULD CHANGE THE COURSE OF INFLATION

Jeffrey Roach, PhD, Chief Economist, LPL Financial
Jeffrey Buchbinder, CFA, Equity Strategist, LPL Financial
Lawrence Gillum, CFA, Fixed Income Strategist, LPL Financial 

For the past year, supply-related problems contributed more to inflation than demand-related imbalances, but that may be changing soon. There are at least three factors that could change the course of inflation. First, the improvement in shipping and general supply bottlenecks could ease inflation. Second, strength in the U.S. dollar could offset some of the current inflationary pressures. And third, import prices have moderated since the beginning of 2022 and as import prices slow, we expect consumer prices to eventually reflect the slowdown in import prices. 

Weekly Market Commentary

7/18/22 Managing Volatility

Jeffrey Roach, PhD, Chief Economist, LPL Financial
Jeffrey Buchbinder, CFA, Equity Strategist, LPL Financial
Lawrence Gillum, CFA, Fixed Income Strategist, LPL Financial

Markets rarely give us clear skies, and there are always threats to watch for on the horizon, but the right preparation, context, and support can help us navigate anything that may lie ahead. So far, thisy ear hasn’t seen a full-blown crisis like 2008–2009 or 2020, but the ride has been very bumpy. We may not be flying into a storm, but there’s been plenty of volatility the first part of 2022. How businesses, households, and central banks steer through the rough air will set the tone for markets over the second half of 2022.