LPL Weekly Market Commentary

Business Fundamentals Back at the Controls

In this week’s Weekly Market Commentary, LPL Financial shares its Mid-Year Outlook for 2017. Key takeaways include: LPL Research forecasts 6–9% returns for the S&P 500 in 2017, commensurate with expected earnings gains. As investors increasingly trust that the economycan stand on its own without the need of monetary policy support, business fundamentals should take over as the primary market engine. The economic expansion is poised to continue, and powered by business fundamentals, this eight-year-old bull market will probably continue as well. Stocks are in a good position to stand on their own as monetary policy support is removed and deliver modest additional gains in the second half of 2017. Read the complete report from LPL Finanical’s Burt White, Chief Investment Officer, and Jeffrey Buchbinder, CFA Market Strategist.  

Fed’s Beige Book Suggests Continued Modest Economic Growth

The latest edition of the Federal Reserve’s (Fed) Beige Book, released 5/31/17, continued to deliver a positive view of the U.S. economy.
The Beige Book is a qualitative assessment of the domestic economy and each of the 12 Fed districts individually, prepared eight times per year, ahead of each of the eight Federal Open Market Committee (FOMC) meetings. LPL believes itis best interpreted by measuring how the key words change over time. The qualitative inputs for the May 2017 Beige Book were collected in April 2017 through May 22, 2017. Based on LPL’s analysis, the Beige Book continues to deliver a positive view of the U.S. economy.  LPL’s Beige Book Barometer (strong words minus weak words) fell slightly to +75 in April, indicating continued steady economic growth.  However, words related to wage pressure have risen slightly over the last six months, indicating a modest but still very manageable impact. Click to read LPL Research’s full report by LPL Financial’s Matthew E. Peterson, Chief Wealth Strategist, and Barry Gilbert, PhD, CFA Senior Economic Analyst.

NASDAQ 6000? What DOES that mean?

Did you know we hit another major market milestone recently? The NASDAQ Composite broke 6,000, 17 years after first reaching 5,000 in March 2000. So what does that mean? According to Burt White, Chief Investment Officer, and Jeffrey Buchbinder, CFA Market Strategist, of LPL Financial, “Although this milestone has sparked more bubble discussions in the media, we believe stocks are far from bubble territory. A comparison of the Nasdaq today versus March 2000 reveals much lower valuations and far less euphoric sentiment.” Read on to learn why, and why it matters. 

Is “Sell in May & Go Away” the Way To Go?

Happy May Day!
One of the most popular trading axioms is to “sell in May and go away,” as equity returns historically have been relatively poor during the six months from May to October and much better from November through April. Is it true? On the surface, it is.  But…is it?  Read more from LPL Research and Ryan Detrick, Senior Market Strategist, to find out!

Q1 2017 Earnings Preview: Double Digits?

The S&P 500 appears likely to produce double-digit year-over-year earnings growth for the first quarter, powered by energy’s rebound. Last year’s first quarter marked the trough of the earnings recession as S&P 500 earnings fell 5%, setting up an easy comparison. We have several reasons to be optimistic, including good macro data and resilient estimates.  Read more about those reasons from LPL Financial’s Burt White, Chief Investment Officer, and Jeffrey Buchbinder, CFA Market Strategist.

Q1 RECAP: STRONG START

April already? Time flies when you’re having fun!
Fixed income is off to a good start in 2017, with almost all sectors in positive territory for the year at the end of the first quarter. It was in many ways a reversal of the fourth quarter of 2016, with some election-driven trades unwinding, as longer-duration fixed income benefitted from markets that may have overshot their landing in the fourth quarter of 2016. Read more from LPL Financial’s Matthew E. Peterson Chief Wealth Strategist and Colin Allen, CFA Assistant Vice President.