LPL Weekly Market Commentary

Bottom Line: Impressive Earnings Season!

Corporate America delivered another outstanding earnings season
with double-digit earnings growth, solid upside to forecasts, and generally upbeat outlooks from corporate management teams. LPL has been particularly impressed with the breadth of earnings gains and upside to revenue forecasts. Strong earnings continue to provide support for the stock market at elevated valuations, with the potential for more support from a reduced corporate tax rate next spring. Read the overview of the nearly completed second quarter 2017 earnings season from LPL Financial’s Burt White, Chief Investment Officer, and Jeffrey Buchbinder, CFA Market Strategist.

2017 – What a year it’s been so far!

While anxieties mount, global equity prices remain at or near all-time highs.
Says LPL Financial’s Senior Market Strategist Ryan Detrick, “2017 has so far been one of the least volatile years we’ve seen in decades. However, boring isn’t always a bad thing, as some of the markets’ best performances took place amid very low volatility.” Check out LPL’s key takeaways in full detail here.

A Technical Check-In: The Global Bull Market Looks Strong

From LPL Research this week, we learn that “The global equity bull market is alive and well, with very broad participation. Longer-term technicals continue to look very healthy and strong, even as the bull market and economic recovery in the U.S. turns eight years old. A closer look at key indexes suggests the path of least resistance remains higher for stocks, although it likely won’t be an easy ride, as volatility could creep higher during the second half of 2017.” Key takeaways include that longer-term technical indicators on equities continue to look strong; and global equity strength is yet another clue that the current bull market is still alive and well. Click here to read the full analysis from Burt White, Chief Investment Officer; Ryan Detrick, CMT Senior Market Strategist; and Dave Tonaszuck, CMT Technical Strategist, all from LPL Financial.

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.