Financial Insights

Earnings Update: So Far, So Good!

LPL Research reports that “Earnings season off to a good start. Third quarter earnings season is rolling and, so far, results have been quite good overall, supported by strong U.S. economic growth, robust U.S. manufacturing activity, tax cuts, and big increases in energy and financials sector profits. Below we recap the results of earnings season thus far, discuss why we expect strong results to continue throughout the reporting season, and highlight several keys we are watching.” Key takeaways include: With about one-fifth of third quarter earnings results in, the numbers have been solid thus far despite tariffs and increasing wage pressures. We expect the good results to continue based on the favorable U.S. macroeconomic environment, including robust manufacturing activity and strong nominal GDP growth. We’ll be keeping an eye on profit-margin pressures, an eventual peak in earnings growth, and China-U.S. trade tensions, plus possible slower growth in Europe. To read more from John Lynch Chief Investment Strategist, and Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial, click here.

Perspective on Market Volatility

From LPL Research:  “After several months of historic calm, stocks sold off sharply last week. Rising interest rates and trade war fears were cited as the primary causes of the sell-off that caused the Dow Jones Industrial Average to drop more than 1300 points on Wednesday and Thursday combined. Concerns about corporate profit margins peaking and a potentially overcrowded tech trade also likely played a role in upsetting a market that had been extraordinarily calm over the past six months. The S&P 500 Index did manage to pare losses, thanks to solid gains on Friday, but still ended the week down over 4%, for the worst week since March. Here we share some perspective on the latest bout of market volatility, which is not particularly unusual, and share our thoughts on where stocks may go from here.” Key takeaways include: Stocks fell sharply late last week amid a plethora of concerns, primarily rising interest rates and trade. We share our perspective on the sell-off and discuss where stocks may go from here. Technical analysis and sentiment measures indicate stocks may be near a bottom To read more from John Lynch Chief Investment Strategist, Jeffrey Buchbinder, CFA Equity Strategist, and Ryan Detrick, CMT Senior Market Strategist, LPL Financial, click here.

Global Equity Market Outlook: Favor U.S.; Stick With ‘Em

LPL Research says, “We continue to favor the United States and emerging markets (EM) over developed foreign markets for global equity allocations. We see the U.S. economy as the primary driver of our forecast for 3.8% global gross domestic product (GDP) growth in 2018, supported by new fiscal policies, while Europe and Japan may lag.* The United States remains a global earnings standout as well. Despite under-performance this year, we continue to see upside potential in EM due to attractive valuations, recent economic growth, favorable demographics, and the potential for resolution to the U.S.-China trade dispute later this year.” Key takeaways include: U.S. economic and earnings growth continue to stand out globally and support our positive view of U.S. equities. We continue to see upside potential in emerging markets due to attractive valuations, recent economic growth, and potential U.S.-China trade resolution. Our cautious outlook for international developed equities is driven primarily by a lackluster economic growth outlook and structural concerns in Europe. To read more from John Lynch, Chief Investment Strategist, and Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial, click here.

Best Quarter for Stocks Since Q4 2013

According to LPL Research, “Investors endured a flurry of trade headlines and emerging market turmoil in the third quarter, but that didn’t slow down U.S. stocks. The S&P 500 Index rose 7.2% during what has historically been the most volatile quarter of the year (7.7% including dividends), its biggest quarterly gain since the fourth quarter of 2013, its best performance in a third quarter since 2010, and the 11th gain in the past 12 quarters.” Key takeaways include: We’ve just wrapped up the best quarter for the S&P 500 Index since the fourth quarter of 2013, despite a variety of challenges. Continued strength in the U.S. economy and impressive growth in corporate America were key drivers of stock market performance last quarter. The third quarter was a challenging one for the bond market, with the Bloomberg Barclays Aggregate Bond Index flat over the three months. To read more from John Lynch, Chief Investment Strategist, and Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial, click here.

The Dow Joins the Party

September 25, 2018 | posted in: Blog, Financial Insights, LPL Weekly Market Commentary | by

According to LPL Research, The Dow joined the S&P 500 in reaching fresh new highs last week. The record came after a drought lasting nearly eight months. The blue chip index has lagged the S&P 500 Index and Nasdaq Composite this year amid escalating trade tensions, which have weighed on the larger multinational U.S. companies that make up most of the 30-stock Dow Jones Industrial Average (Dow). This week, we’ll discuss the impact of the Dow’s new high and whether stocks have enough support from economic growth and corporate profits to build on recent gains.   Read More  »

Midterm Elections and Stocks: Friends or Foes?

September 18, 2018 | posted in: Blog, Financial Insights, LPL Weekly Market Commentary | by

As LPL Research explains, “2018 continues to be a solid year for U.S. equities, even in the face of many well-documented concerns (we’re looking at trade worries and the flattening yield curve here). Want some good news? The calendar may quickly become a bull’s best friend.”  Click here to read more about why.