Weekly Market Commentary

2/6/23 BRIGHTENING OUTLOOK FOR INTERNATIONAL EQUITIES

Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial
Quincy Krosby, PhD, Chief Global Strategist, LPL Financial 

Investors got more excited about international investing late last year. Some of that was chasing better returns, as developed international equities solidly beat the U.S. over the last three months of 2022. Some was the increased popularity of value investing as mega-cap U.S. technology stocks became less in favor. The surprising resilience of core European economies and a weaker U.S. dollar added to the market’s excitement. After such strong performance in international benchmarks recently, is there enough good news still yet to come for these markets to continue to outpace the U.S.? 

Weekly Market Commentary

1/30/23 WILL JANUARY HIT THE TRIFECTA?

Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial
Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial 

The script has been flipped in 2023. Last year’s underperformers have turned into outperformers this year, driving the S&P 500 Index up over 5% this month. The pace and composition of the rally have left many investors skeptical over its sustainability, especially amid a lackluster earnings season thus far. Of course, the market is also forward-looking, with expectations for falling inflation and a less hawkish Federal Reserve (Fed) as we progress into 2023. And although the trajectory of the rally will likely slow, seasonal indicators point to a path higher for U.S. equity markets by year-end. 

Weekly Market Commentary

1/23/23 A FEISTY BULL-BEAR DEBATE

Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial
Quincy Krosby, PhD, Chief Global Strategist, LPL Financial J
effrey Roach, PhD, Chief Economist, LPL Financial
Adam Turnquist, CMT, Chief Technical Strategist 

The latest episode of the debate between stock market bulls and bears has gotten more interesting. For every valid point from one side, there’s an equally compelling argument on the other side. Perhaps the best reason for the debate is the uniqueness of this environment. The pandemic and its aftermath don’t come with a historical playbook. We haven’t been here before. So we’ll just recognize that the outlook is uncertain, weigh the pros and cons, glean what we can from the past, and give it our best shot. Call us cautious bulls. 

Weekly Market Commentary

1/17/23 Q4 EARNINGS PREVIEW: PESSIMISM MAY BE OVERDONE

Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial
Thomas Shipp, CFA, Quantitative Equity Analyst 

Fourth quarter earnings season is underway and probably won’t bring much good news. Lackluster global growth, ongoing profit margin pressures from inflation, and negative currency impacts are likely to translate into a year-over-year decline in S&P 500 Index earnings for the quarter. As always, guidance matters more as market participants look forward. The key question coming into this earnings season is whether the pessimism surrounding 2023 earnings has gone too far. 

Weekly Market Commentary

1/9/23 LESSONS LEARNED IN 2022

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

We believe accountability and modesty are among the keys to success in this business. In striving for those qualities, LPL Research has a tradition of starting off a new year with a lessons learned commentary. We got some things wrong last year, no doubt. But those who don’t learn from their mistakes are doomed to repeat them. Here are some of our lessons learned from 2022. As you might imagine, inflation and the Federal Reserve are common themes throughout. 

Weekly Market Commentary

1/2/23 2023 MARKET OUTLOOK

LPL Financial Strategic and Tactical Asset Allocation Committee 

2022 was a dizzying year as markets and the global economy continued to find itself out of balance due to the still present aftereffects of the COVID-19 pandemic and the policy response to it. If 2022 was about recognizing imbalances that had built in the economy and starting to address them, we believe 2023 will be about setting ourselves up for what comes next as the economy and markets find their way back to steadier ground. The process of finding balance may continue to be challenging and we may even see a recession, but underlying fundamentals could create opportunities in stock and bond markets that were difficult to find in 2022. 

Weekly Market Commentary

12/19/22 HISTORIC YEAR FOR CENTRAL BANK ACTIVITY

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

The Federal Reserve (Fed) wrapped up its last Federal Open Market Committee (FOMC) meeting of the year last week, where it hiked short-term interest rates for the seventh time in as many meetings, taking the fed funds rate to 4.5% (upper bound). A day later, both the European Central Bank (ECB) and the Bank of England (BoE) also hiked interest rates, taking their respective policy rates to the highest levels since 2008. Over 90% of central banks have hiked interest rates this year, making the (mostly) global coordinated effort unprecedented. The good news? We think we’re close to the end of these rate hiking cycles, which could lessen the headwind we’ve seen on global financial markets this year. 

Weekly Market Commentary

12/12/22 DECEMBER DOWN BUT NOT OUT

Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial
Barry Gilbert, PhD, CFA, Asset Allocation Strategist, LPL Financial 

Despite the S&P 500 Index starting December with five consecutive days of losses, we think December is down but not out. December often starts slow but historically has been a strong month. There are also some potentially supportive seasonal patterns ahead, such as the Santa Claus Rally, the outlook for January following down years, and the third year of the presidential cycle. ‘Tis the season, and this week LPL Research looks at some important seasonal patterns as the year winds down. 

Weekly Market Commentary

12/5/22 RESILIENT CONSUMERS HAVE NOT SAVED RETAIL STOCKS

Jeffrey Roach, PhD, Chief Economist, LPL Financial
Thomas Shipp, CFA, Quantitative Equity Analyst, LPL Financial 

Economic and corporate data support the initial strong reads on holiday retail sales despite the macro headwinds, reinforcing the idea that today’s consumer is in a better position than usual at this point in the business cycle. However, consumers were likely tapping into credit and using savings to support spending. In this week’s Weekly Market Commentary we share insights on publicly traded retailers, analyze their underperformance year to date, and look forward to 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

11/21/22 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.