Weekly Market Commentary

May 30th, 2023 | LPL Research

Mega-cap stocks, which have outlier market capitalizations and are often referred to as ‘the generals,’ have made an impressive comeback this year. Last year’s headwinds of higher rates underpinned by aggressive Federal Reserve (Fed) tightening have finally abated. Interest rate stabilization, signs of receding inflation, and a potential peak in the terminal rate by this summer have helped bring buyers back into the space. 

May 23rd, 2023 | LPL Research

If history at least rhymes during this cycle and we do see lower yields over the next year, intermediate core bonds could very well outperform cash and other shorter maturity fixed income strategies. Historically, core bonds, as proxied by the Bloomberg Aggregate Bond Index, have performed well during Fed rate hike pauses.

May 15th, 2023 | LPL Research

Solid earnings results compared with expectations have helped keep stocks afloat in recent weeks amid debt ceiling jitters, regional bank concerns, and louder calls for recession. But we’re still in an earnings lull and a weak seasonal period for stocks. While a Fed pause is likely to arrive in June, gains may depend on the continued resilience of the U.S. economy.

May 1st, 2023 | LPL Research

“Sell in May and go away” is the seasonal stock market pattern in which stocks generally produce the best returns from November through April and the worst returns from May through October. This pattern has been strong enough—and the adage popular enough—that it has probably been somewhat of a self-fulfilling prophecy over many years.

April 24th, 2023 | LPL Research

Small businesses are often considered the backbone of the economy because of the amount of economic activity generated by the sector, and it looks like a backache has emerged. Pay careful attention to surveys from the National Federation of Independent Businesses (NFIB) for leading insights in the direction of the U.S. economy.

April 17th, 2023 | LPL Research

Credit and liquidity are the primary risks impacting the CRE market right now. While ownership of CRE debt is relatively diverse, banks hold 61% of all CRE mortgages, according to FactSet. Credit spreads within investment grade commercial mortgage-backed securities, which rise in conjunction with default risk, have roughly doubled over the last 12 months.

April 10th, 2023 | LPL Research

Stocks may not get much support from earnings in the near term as the malaise continues. However, we do expect the market to benefit from the end of the Fed’s rate hiking campaign—likely in May. Higher interest rates may challenge stock valuations this year, but we still see potential for additional gains for stocks over the next nine months.

April 3rd, 2023 | LPL Research

Recession risk is still elevated, which explains why markets and the Fed are at odds about the future path of interest rates. Markets are probably right that the Fed will cut rates by the end of the year.

March 27th, 2023 | LPL Research

The rapid collapse of Silicon Valley Bank (SVB), followed by continued pressure on regional banks, along with headlines surrounding the struggle to shore up confidence in First Republic Bank (FRC), has the market on alert for other potentially vulnerable banks.

March 21st, 2023 | LPL Research

It’s easy to forget about long-term investment objectives when markets are fluctuating widely, but it is those moments when sticking to a well thought out plan is most critical. It’s also a reminder why a diversified asset allocation plan is important.

March 13th, 2023 | LPL Research

We’re in a very strong seasonal period for stocks, based on the four-year presidential cycle (year three has an average gain of 16.8%, higher 89% of the time since 1950). Fed pauses—likely coming fairly soon—have historically been followed by double-digit returns one year later, on average.

March 6th, 2023 | LPL Research

Economic activity does not stop like an airplane eventually does, but rather the economy will settle into a steady state where growth is consistent with factors such as population and productivity.

February 27th, 2023 | LPL Research

Since the government is running a fiscal deficit, and since Treasury cannot issue debt to cover that deficit, spending cuts would need to take place. The spending cuts, if prolonged, would likely push the U.S. economy into recession.

February 20th, 2023 | LPL Research

Last year, stocks and yields moved mostly in opposite directions. When inflation expectations and interest rates moved higher, stocks tended to sell off and vice versa. But we have seen this relationship change recently, as stocks and yields have risen together.

February 13th, 2023 | LPL Research

Low participation rates continue to weigh on the minds of economists and investors, but it’s important to remember that business formation stats are consistently growing above pre-pandemic levels

February 6th, 2023 | LPL Research

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.

January 30th, 2023 | LPL Research

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.

January 18th, 2023 | LPL Research

The key question to answer this earnings season is whether the pessimism surrounding 2023 earnings has gone too far. LPL Research believes that it probably has. 

January 3rd, 2023 | LPL Research

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.

December 19th, 2022 | LPL Research

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).

December 12th, 2022 | LPL Research

December is off to a rough start, and so far it’s not living up to its seasonal reputation of being one of the best months for equity market returns. Since 1950, the S&P 500 has historically produced average returns of just over 1.5% and has finished the month in positive territory 75% of the time.

December 5th, 2022 | LPL Research

Elevated inflation this past year appeared to marginally impact the consumer but despite high prices, consumers were active on the Friday after Thanksgiving. Consumers were especially interested in heading to restaurants after Thanksgiving Day – spending at restaurants was over 20% above last Black Friday, partially driven by higher food prices but also supported by a resilient consumer. 

November 21st, 2022 | LPL Research

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.

November 14th, 2022 | LPL Research

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...

November 7th, 2022 | LPL Research

In this week’s Weekly Market Commentary, we look at why the stock market may respond favorably to the midterm election, whatever the outcome...

October 31st, 2022 | LPL Research

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.

October 24th, 2022 | LPL Research

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.

October 17th, 2022 | LPL Research

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. Here we take a look at whether expectations are low enough as we preview third quarter earnings season.