Key Takeaways from Fourth Quarter 2018 Earnings

February 12, 2019 | posted in: Blog, Financial Insights, LPL Weekly Market Commentary | by

According to LPL Research, “Earnings growth slowed in the fourth quarter but was still solid. With two-thirds of S&P 500 Index companies having reported results so far, corporate America has delivered solid earnings growth—in the mid-to-high teens—for the quarter. However, slowing global growth and trade tensions have challenged the outlook, setting up slower earnings gains in the coming year. This week we provide key takeaways from fourth quarter earnings season, and update our 2019 earnings outlook.” Key takeaways include: Earnings growth for the fourth quarter is tracking to a solid 17%, above prior estimates but below the pace of the previous three quarters. The bar has been substantially lowered for the first quarter, setting up potential upside surprises, particularly if trade uncertainty is diminished. We expect S&P 500 companies will be able to at least deliver mid-single-digit earnings growth in 2019, driven by solid economic growth, fiscal stimulus, and share buybacks. To read more from John Lynch, Chief Investment Strategist, and Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial, click here.

“That Was the Easy Part”: What’s Next?

According to LPL Research, “2019 is off to a roaring start, as the S&P 500 Index gained 7.9% for its best January since 1987. Stocks’ strong January comes on the heels of the worst December in 87 years. What happens now? This week we will discuss why we see signs that point to higher prices, why the easy gains have likely already occurred, and what several key hurdles lie ahead.” Key takeaways include: Stocks posted their best January in more than 30 years after a historically bad December. Stocks’ bounce was the easy part; the next 10% will likely be much harder. There are technical signs that suggest December marked a major low and potentially higher prices are ahead. To read more from John Lynch, Chief Investment Strategist, and Ryan Detrick, CMT Senior Market Strategist, LPL Financial, click here.

Brexit Clouds Linger…

January 23, 2019 | posted in: Blog, Financial Insights | by

LPL Research addresses the concerns about “Brexit’s uncertainty continuing to cloud Europe’s economy. On January 15, more than two-thirds of the U.K. Parliament voted against British Prime Minister Theresa May’s European Union (EU) separation deal, another bump in the road for “Brexit.” That outcome had been anticipated, though the wide margin underscored the tough road ahead. Even though May survived a no-confidence vote the next day, the margin was narrow, and the path forward remains unclear. Here we discuss potential market implications of the United Kingdom’s ongoing effort to leave the EU. We also share our updated views on European equities and reiterate our preference for emerging market (EM) equities over developed international equities.”   Read More  »

Fourth Quarter Earnings Preview – From Great to Good

Fourth quarter earnings reporting begins this week. Over the next five days (January 14–18), 35 companies in the S&P 500 Index will report quarterly results, highlighted by several big banks. Here LPL Research previews fourth quarter earnings, discusses several key drivers, and shares some thoughts on the outlook for 2019.  LPL Research expects a mid-to-high-teens increase in earnings for the quarter, driven primarily by the solid economic backdrop. Key takeaways include: S&P 500 earnings growth will slow in the fourth quarter but is still expected to be strong. U.S. economic growth, tax cuts, higher oil prices, and corporate stock buybacks are among the positive drivers. However, earnings may be capped by trade tensions, slower economic growth abroad, and a rising U.S. dollar. To read more from John Lynch Chief Investment Strategist, andl Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial, click here.

Lower Valuations Add Long-Term Opportunity

This week, LPL Research lokos “at stock valuations to try to gauge the potential opportunity for stocks. Amid the dizzying volatility and news cycle that investors have had to deal with lately, it can be difficult for many investors to take a step back and see beyond the daily headlines. We try to do that this week by focusing on what lower stock market valuations relative to corporate profits may signal for stock market performance over the next year and beyond.” Key takeaways include: A significant drop in stock market valuations may portend above-average stock market performance, based on history. Stocks also look attractively valued relative to bonds based on a comparison of earnings yields. Though it is difficult to think long-term during volatile market environments, low valuations have been closely tied to future positive long-term stock performance. To read more from John Lynch, Chief Investment Strategist, and Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial, click here.

Santa Came Late This Year But He Made It

December 28, 2018 | posted in: Blog, Financial Insights, LPL Weekly Market Commentary | by

The #SantaClausRally looked iffy until just a couple of days ago, although it’s still going to be a bumpy ride.   Here are market observations on the crazy week that was from LPL Research.