Insights

Weekly Market Commentary | Trade, Tariffs, and Inflation

NOVEMBER 18, 2024

Trade dynamics have shifted considerably since President Trump’s first administration. Reshoring among U.S. businesses and headwinds to the Chinese economy may limit the inflationary impact from rogue trade policy.

Weekly Market Commentary | Election Day Takeaways

NOVEMBER 11, 2024

The clouds of uncertainty parted last week as former President Donald Trump decisively won the U.S. election, making him the second U.S. president to win non-consecutive terms (Grover Cleveland was the first to do it back in 1892). Investors welcomed the news with renewed risk appetite, bidding the S&P 500 to its 50th record high of the year on Friday. Trump’s proposed economic policies, including deregulation, a likely extension of the 2017 tax cuts, a possible corporate tax rate cut, and proposed tax exemptions on tips, social security, and overtime pay helped underpin buyer enthusiasm. The immediate de-risking of when the election will be decided was another big factor behind the post-Election Day rally.

Weekly Market Commentary | Election Stock Market Playbook

NOVEMBER 4, 2024

As Election Day approaches, we discuss potential stock market implications of various possible outcomes. But before we get into that, we offer our regular public service announcement around elections and investing. Political views are best expressed at the polls and not in portfolios.

Weekly Market Commentary | What Scares Us About the Economy and Markets

OCTOBER 28, 2024

Stocks have done so well this year that it’s fair to say market participants haven’t feared much. But just because risks haven’t affected markets lately doesn’t mean they won’t in the future. In that “spirit,” as Halloween approaches, we discuss what scares us about the economy and financial markets.

Weekly Market Commentary | Q3 Earnings Should Be Fine, but Expectations Beyond This Quarter Are High

OCTOBER 21, 2024

The bar for third quarter earnings is low, with analysts currently expecting only about a 3% increase
in S&P 500 earnings per share (EPS). That low bar and a supportive economic environment point to potential upside. However, stocks may already be pricing in solid results, with the S&P 500 up more than 7% since the third quarter began on July 1. Here we preview earnings season and discuss some of the key drivers of earnings growth in the year ahead.

Weekly Market Commentary | Happy Second Birthday Bull Market – Here’s to a Third!

OCTOBER 14, 2024

On October 12, 2022, there were very few comments suggesting that a new bull market was in the throes of being born as the S&P 500 opened at 3,590.83 and closed at 3,577.03. After all, inflation was still running hot even though the Federal Reserve (Fed) began its rate-hiking campaign on March 16, 2022, by raising rates by 25 basis points (0.25%) and moving to a 50-basispoint hike on May 5, 2022, as it tried to quell inflationary pressures. By mid June, a series of 75- basis-point hikes were introduced as the Consumer Price Index (CPI) peaked in June at 9.1%.

Weekly Market Commentary | Just When We Recalibrated, Another Shock Arrived

OCTOBER 7, 2024

Federal Reserve (Fed) Chair Jerome Powell said last month’s decision to cut the fed funds target rate by a half percentage point was due to a “recalibrating” policy, as the Fed follows its dual mandate regarding inflation and growth. The new buzzword — recalibration — implies mechanical fine-tuning, but unfortunately, the macro economy is not that robotic. We are full of emotional people with ever-changing needs and wants. However, the buzzword also evokes something therapeutic; that is, the Fed is not cutting rates because of an imminent recession. In fact, the economy will likely grow above trend for yet another quarter or two. However, risks are rising for 2025.

ELECTION INSIGHTS | This Time Will Be Different

Investing in the fog of the 2024 election season.

Weekly Market Commentary | Gold Rally Is No Flash in the Pan

SEPTEMBER 30, 2024

When it comes to investing, gold may be the antithesis of artificial intelligence (AI). The precious metal has acted as a store of value for thousands of years with zero technological innovation — gold is discovered, not developed. Gold is also a real tangible asset and can act as a potential hedge against inflation or a safe haven during times of crisis. Given these properties and the backdrop of a risk-on-record-setting equity market, many investors are wondering what’s behind the paradoxical price action of gold’s rally to new highs and how the yellow metal has matched the momentum in AI stocks over the last several months (gold and the equal-weight Magnificent Seven Index are both up around 20% since March). Herein we discuss the key drivers of gold and why this rally is no flash in the pan.

Weekly Market Commentary | Policy Crosscurrents: Potential Market Impacts

SEPTEMBER 23, 2024

Of course, last week’s headliner was Jerome Powell and the Federal Reserve (Fed) cutting rates by a half percent on Wednesday, September 18, the first time since the COVID-19 pandemic broke out in 2020. The Fed “pause” ended at 423 days and now stands as the second-longest on record, while the 26% gain for the S&P 500 during the pause (7/27/23–9/18/24) ranks first. Here we share some thoughts on the Fed’s move last week and some potential market implications of not only Fed policy but also fiscal policy post-election.

Weekly Market Commentary | Election Implications on the Municipal Market

SEPTEMBER 16, 2024

With the first presidential debate behind us, it’s safe to say election season is in full swing. While last week’s debate was light on economic policies, the future of tax policy (along with potential efforts to arrest elevated federal deficits) could have broad implications for the municipal (muni) market — some good, some not so good. With the Tax Cuts and Jobs Act (TCJA) set to sunset in 2025, the election will go a long way in determining the future of tax policy in the U.S. And for muni securities and their unique tax-exemption characteristics, the election will go a long way in determining future demand for the asset class.

Weekly Market Commentary | Second Quarter Earnings Recap: Good, Not Great

SEPTEMBER 9, 2024

Second quarter earnings season is in the books, and it was a good one. S&P 500 companies collectively grew earnings at a double-digit pace for the first time in three years. Companies beat estimates at a solid 79% clip. Guidance from company CEOs and CFOs was relatively upbeat. And although some were a bit disappointed by big technology results based on stock reactions, the problem was high expectations more than anything else.

Weekly Market Commentary | Russia To Host BRICS Amid Heightened Geopolitical Conflict

SEPTEMBER 3, 2024

In December 2023, Vladimir Putin declared that the 2024 BRICS Summit, hosted by Russia, would be focused on establishing a “fair world order” based on shared principles. At the core of Putin’s goals for stronger BRICS economic integration is a longstanding and overriding objective to provide a viable alternative to the West’s global hegemony in nearly all facets of political, military, economic, financial, and security affairs.

Weekly Market Commentary | It's Go Time for the Federal Reserve

AUGUST 26, 2024

In his recent speech, Federal Reserve (Fed) Chairman Jerome Powell focused on the fragilities of the labor market and is preparing markets for the new phase for policy. “The time has come for policy to adjust.” A soft landing looks achievable, barring any shocks. Disinflation while preserving labor market strength is only possible with anchored inflation expectations, so an independent and credible central bank is key. One of the best concepts in the speech for investors to understand is the current data shows an evolving macro landscape. The jury is still out on if the Fed can successfully manage the risks to both sides of their dual mandate.

Weekly Market Commentary | Stock and Bond Market FAQs From the Field

AUGUST 19, 2024

Every year as the summer months draw near their end, LPL Financial hosts its annual conference for financial advisors. While the conference is an excellent opportunity for advisors to expand upon professional interests, discover ways to enhance their impact on clients, and connect with industry experts — learning is a two-way street. At this year’s big event with nearly 9,000 attendees in sunny San Diego, the LPL Research team had the unique opportunity to connect with many of these advisors in person to get their perspectives on the capital markets.

Weekly Market Commentary | Pullbacks Are Common but Painful

AUGUST 12, 2024

Pullbacks are the stubbed toe of the stock market. I was reminded of this over the last week as I contemplated the recent surge in volatility while picking up toys after our two-year-old finally fell asleep. As I carried a Tonka truck back to its usual parking spot next to the toy farm, I slammed my toe into the foot of the couch. The pain was acute, but not worthy of a full-blown panic. After a few deep breaths, the sting began to wear off and I assessed the damage to find a little redness, but nothing broken.

Weekly Market Commentary | Thoughts on Global Selloff and the Dollar's Path to Decompressing

AUGUST 5, 2024

Before the jobs report was released on Friday, we wrote a commentary on the U.S. dollar. In light of the events over the weekend and Monday, we start with some comments on the global stock market selloff.

Weekly Market Commentary | Key Themes for the Macroeconomic Landscape in the Second Half of 2024

JULY 29, 2024

Investors had a healthy appetite for risk so far this year as a so-called potential soft landing has been factored in. We have an economy with rising wages, decelerating inflation, and a Federal Reserve (Fed) on the cusp of cutting rates. What more could you ask for? Of course, political uncertainty and headwinds from geopolitical risks could rain on that parade, and that’s why investors should exhibit discernment in a market like this.

Weekly Market Commentary | Key Themes for Bonds in the Second Half of 2024

JULY 22, 2024

The first half of the year was a challenging environment for a lot of fixed income markets, especially higher-quality markets. With the Federal Reserve (Fed) seemingly unlikely to lower interest rates until after the summer months (at the earliest), the “higher for longer” narrative has kept a lid on any sort of bond market rally. While falling interest rates help provide price appreciation in this higher-for-longer environment, fixed income investors are likely better served by focusing on income opportunities, which has been the traditional goal of fixed income investors.

Weekly Market Commentary | Key Themes for Stocks in the Second Half of 2024

JULY 15, 2024

Outlook 2024: A Turning Point, released in December 2023, featured our perspective on how stocks might respond to turning points in inflation and monetary policy. That response was quite positive as we now know, as easing inflation, anticipation of Federal Reserve (Fed) rate cuts, increasing chances of a soft landing for the U.S. economy, and artificial intelligence (AI) excitement combined to send stocks up double-digits over the first six months of 2024.

Weekly Market Commentary | Double-Digit Earnings Growth on Tap

JULY 1, 2024

With stock valuations elevated after such a strong first half, earnings growth will be key to holding, or potentially building on these gains. LPL Research believes stocks have gotten a bit over their skis, but earnings season may not be the catalyst for a pullback in the near term given all signs point to another solid earnings season and stocks have mostly performed well during the peak weeks of reporting season in recent years.

Weekly Market Commentary | Artificial Intelligence: The Antidote to Fed Policy?

JUNE 24, 2024

Developments in artificial intelligence may be the antidote for an aging population, but it takes time for these advancements to work themselves into the fabric of our nation’s businesses. The impact of new developments can persist in markets, so investors need to carefully discern what could be different this time around.

Weekly Market Commentary | Keep Calm and Clip Bond Coupons

JUNE 17, 2024

With a Federal Reserve (Fed) meeting, a Bank of Japan (BOJ) meeting, two very important inflation reports, and nearly $120 billion of new Treasury securities auctioned — last week was quite the week for markets. And while the Fed meeting was supposed to get top billing, it turned out the inflation data stole the show. In fact, at least for the Treasury market, it’s been the economic data that has had the largest impact on changing bond prices/yields.

Weekly Market Commentary | India at the Crossroads

JUNE 10, 2024

Indian Prime Minister Narendra Modi’s recent victory in the national elections was muted at best. While he secured a rare third term in the nation’s highest office, his decisive legislative supermajority failed to materialize. Modi has made revitalizing the Indian economy and increasing foreign direct investment (FDI) a cornerstone of his pro- business platform. With markets adjusting to the unexpected outcome and new legislative circumstances, he and his party now pursue cementing the economic gains generated in his earlier terms, to ensure India continues making strides towards a modern capitalist economy that includes the wider populations and supports all Indians.

Weekly Market Commentary | Adjusting the Sector Sails

JUNE 3, 2024

To say May was an eventful month for the market is an understatement. Investors navigated around the latter half of first-quarter earnings, a breakout to record highs for the broader market, elevated volatility across fixed income and currency markets, and a mixed bag of economic data — not to mention elevated political uncertainty stemming from the conviction of former President Donald Trump.

Weekly Market Commentary | Earnings are Doing Their Part: Exploring Q1 Earnings

MAY 28, 2024

The first quarter earnings season is largely in the books, and it was excellent. In fact, S&P 500 earnings per share (EPS) would have been up double digits in the quarter if not for a big loss Bristol Myers Squibb (BMY) absorbed in an acquisition. Even with that nearly three-point drag from the drugmaker, a nearly 7% increase in earnings — the biggest since the first quarter of 2022 — is impressive.

Weekly Market Commentary | How's It Going? Depends on Who You Ask

MAY 20, 2024

The post-pandemic economy is treating people very differently, creating a headache for central bankers. The extreme differences can often get traced back to living situations, as renters have a very different experience than homeowners. Since millions of homeowners refinanced mortgages to extremely low rates a few years ago, the economy is less sensitive to interest rate policy. In fact, the Jackson Hole Economic Policy Symposium sponsored by the Kansas City Federal Reserve in August will debate the effectiveness and transmission of monetary policy because of these post-COVID-19 dynamics, likely revealing important investment implications.

Weekly Market Commentary | Preferred Securities: Still Our Preferred Non-Core Bond Sector

MAY 13, 2024

It continues to be a challenging environment for a lot of fixed income markets, especially higher quality markets. With the Federal Reserve (Fed) seemingly unlikely to lower interest rates until after the summer months (at the earliest), the “higher for longer” narrative has kept a lid on any sort of bond market rally. And while falling interest rates help provide price appreciation in this higher-for-longer environment, fixed income investors are likely better served by focusing on income opportunities.

Weekly Market Commentary | Sell in May? Maybe Not

MAY 6, 2024

“Sell in May and Go Away” is one of the most widely used maxims on Wall Street. There is no shortage of financial media coverage on this topic as the calendar turns to May. However, this phrase may be more rhyme than reason, as stocks tend to trade higher during this period (especially more recently), subject to potentially elevated volatility. Of course, seasonality is one factor that could influence markets, but the economy and monetary policy are much bigger factors.

Weekly Market Commentary | That Was Quite a Week

APRIL 29, 2024

Last week was a pivotal one for markets, with the S&P 500 coming off a 3% weekly decline the week before. In terms of economic data, we got our first look at first quarter gross domestic product (GDP) as well as the March reading of the Federal Reserve’s (Fed) favorite inflation measure — the core PCE deflator. If that wasn’t enough to digest, over 150 S&P 500 companies reported quarterly earnings last week, including the first batch of big tech names.

Weekly Market Commentary | The Ever-Changing Market Narrative

APRIL 22, 2024

Volatility has come back into the market as the narrative shifted toward a higher-for longer monetary policy backdrop. Signs of sticky inflation and a resilient economy, including a strong labor market, have underpinned the change in expectations. Yields have reacted by rerating significantly higher this month, while stocks have pulled back from overbought conditions.

Weekly Market Commentary | Revisiting Energy

APRIL 15, 2024

As the first quarter earnings season kicked off on April 12, expectations for the energy sector were decidedly negative. That low bar has tempted analysts to forecast a series of positive surprises as recent data releases for both the U.S. and China suggest a stronger economic underpinning, and the manufacturing sector appears to have bottomed in both countries.

Weekly Market Commentary | What to Wach This Earnings Season

APRIL 8, 2024

First quarter earnings season kicks off this week with several big banks reporting this Friday, including sector bellwether JPMorgan Chase (JPM). This quarter will seem quite similar to the fourth in terms of growth and drivers, with mega cap technology leading the way. But importantly, the point when the “493” will start contributing to overall profits is drawing closer (the 493 refers to the S&P 500 minus the seven mega cap technology stocks).

Weekly Market Commentary | IPOs as a Market Tell

APRIL 1, 2024

The initial public offering (IPO) market allows institutional investors to incorporate the macroeconomic landscape with individual corporate earnings data — and future earnings forecasts — to ascertain a share price that will hold up to analyst and media scrutiny coupled with overall market dynamics. However, the IPO market has increasingly included allocations for a retail tranche designed to include clients of brokerage firms that receive shares during the issuance stage of the IPO process.

Weekly Market Commentary | Navigating the Strategic Investing Landscape

MARCH 25, 2024

The difference between strategic and tactical investments time horizons can be likened to the ebb and flow of tidal patterns in oceans. Strategic investing mirrors the steady rise and fall of the tides, focusing on long-term goals and expectations more stable akin to the predictable rhythm of oceans. On the other hand, investing in tactical time horizons resembles the dynamic nature of changing tides, responding to short-term market conditions like unpredictable surges and waves in the sea.

Weekly Market Commentary | A Busy (And Perhaps Historic) Week for Central Banks

MARCH 18, 2024

It seems like we just can’t stop talking about central banks. And this week will be no different, with at least 15 central bank meetings planned, some more important than others, of course. While the Federal Reserve (Fed) meeting will likely take top billing in the financial media, it’s the Bank of Japan (BOJ) meeting on Tuesday that could be the real game changer.

Weekly Market Commentary | Gold Shines Brighter Than Ever

MARCH 11, 2024

Bullion broke new ground last week after rallying to a record high. Growing investor confidence for a Federal Reserve (Fed) rate cut by this summer dragged down yields and the dollar, creating a tailwind for gold. The breakout above key resistance at $2,075 was also a major technical development, confirmed by bullish momentum that suggests the rally could continue.

Who Do Markets Want to Win the Election

MARCH 7, 2024

Since 1976, when Super Tuesday first surfaced, market performance ahead of the primaries has correlated closely with election results. While acknowledging the limited data, when the S&P 500 was higher ahead of Super Tuesday, the incumbent president’s political party won the election four of the last five times. And when stocks were lower into Super Tuesday, the incumbent president’s party lost the election six of the last seven times.

Weekly Market Commentary | Super Six Drives Solid Earnings Season

MARCH 4, 2024

Fourth quarter earnings season is winding down with only about a dozen companies in the S&P 500 left to report. After a slow start mired by messy bank results early on, corporate America picked up the pace and ended up delivering results well ahead of expectations. The “Super Six” was part of the story — the Magnificent Seven minus Tesla (TSLA) — but resilient profit margins are also noteworthy.

Weekly Market Commentary | Buybacks Are Back

FEBRUARY 26, 2024

After a brief lull in 2023, buyback activity appears to be back this year. A resilient U.S. economy, easing inflation pressures, and expectations for an eventual shift to interest rate cuts have given corporate America confidence to boost authorized share repurchases. These companies have a history of outperforming the broader market and tend to have more exposure to momentum, value, and growth factors.

Weekly Market Commentary | Treasuries: Who’s Buying and Why it Matters

FEBRUARY 20, 2024

As the Federal Reserve (Fed) continues with its Quantitative Tightening (QT) program, questions abound regarding the Treasury Department’s expanding funding needs. The QT program is designed to reduce the Fed’s balance sheet — now $7.7 trillion down from $9 trillion — after Treasury notes (mostly) were bought after economic concerns intensified during the COVID-19-related pandemic. Households and, perhaps surprisingly, foreign investors have been buyers recently, and with the amount of Treasury supply coming to market, both will need to keep buying.

Weekly Market Commentary | Outlook for U.S. Economy Continues to Brighten

FEBRUARY 12, 2024

When we wrote the annual outlook last November, the data was mixed. Some metrics hinted at emerging cracks in the economy while others suggested the growth trajectory in capital markets and the economy had legs. So, the variety of the data produced the narrative that business activity in the New Year would grow on an annual basis but experience some bumps in the first half of the year.

Weekly Market Commentary | Will the January Barometer Come Through?

FEBRUARY 5, 2024

A positive January has historically been a bullish sign for stocks. Yale Hirsch, creator of the “Stock Trader’s Almanac”, first discovered this seasonal pattern back in 1972, which he called the January Barometer and coined its popular tagline of ‘As goes January, so goes this year.’

Weekly Market Commentary | Is Too Much Optimism Priced In?

JANUARY 29, 2024

With the S&P 500 having recently ascended to a fresh record high after such a strong 2023, it’s natural for investors to worry that valuations have become over-extended. On traditional valuation measures, valuations do appear high, and it does seem reasonable to expect more moderate stock market returns going forward.

Weekly Market Commentary | Will Shipping Disruptions Alter Fed Plans?

JANUARY 22, 2024

Shipping disruptions in the Red Sea could temporarily impact goods prices but not at the same magnitude as during the pandemic. Tight financial conditions, slowing economic growth, and a disinflationary trend all support the Federal Reserve’s (Fed) pivot away from tightening monetary policy to easing in the new year.

Weekly Market Commentary | Magnificent Seven and Margins are Keys to Q4 Earnings Season

JANUARY 16, 2024

Fourth quarter earnings season kicked off last week, and markets were generally left wanting more. that doesn’t necessarily mean this earnings season will be disappointing, especially considering the bar has been lowered so much. Plus, some of the disappointment was around special bank charges and November-quarter-end companies’ results were solid.

Weekly Market Commentary | China 2024 Faces Demanding Challenges

JANUARY 8, 2024

As China emerged a year ago from the shadow of the stringent zero COVID-19-related measures that all but shut down its economy for over two years, much was expected in terms of its economic growth prospects. There were numerous reports suggesting the world’s second largest economy would ignite a bout of inflation as its industrial base would require vast quantities of commodities to power a newly energized China.

Weekly Market Commentary | Lessons Learned in 2023

JANUARY 02, 2024

To say 2023 was challenging may be an understatement. While stocks had a surprisingly impressive year, there was no shortage of obstacles for investors to overcome, including historic interest rate volatility, recession risk, banking sector turmoil, and a game of monetary policy chicken played between the markets and the Federal Reserve (Fed).

Weekly Market Commentary | Key Equity Themes for 2024

DECEMBER 18, 2023

Following the Federal Reserve’s (Fed) aggressive rate-hiking campaign in 2022 and 2023, stocks
are entering a phase in which the market narrative is focused on interest-rate stability — as inflation,
we believe, comes down further. Low and stable interest rates should help support stock valuations,
while corporate profits are moving into a sweet spot.

Weekly Market Commentary | Discord in the OPEC+ Oil Patch

DECEMBER 11, 2023

Despite a heavy lobbying effort to cajole OPEC+ members to agree to a unified cut in oil production,
Saudi Arabia, the de facto leader of the energy cartel, was unable to orchestrate anything more than
pledges on a “voluntary” basis.

Weekly Market Commentary | Market Opportunities Amid an Economic Rotation

DECEMBER 04, 2023

Opportunities abound in the markets, even during periods when the economy appears ripe for a
regime shift. Recent growth metrics surprised to the upside, but leading indicators point toward
some downside risk.

Weekly Market Commentary | Anatomy of a Market Rally

NOVEMBER 20, 2023

As the market appears to be taking a rest and consolidating its $2.7 trillion rally leading up to the Thanksgiving holiday, the historical patter over the last five years suggests the shortened holiday week typically enjoys modest gains.

Weekly Market Commentary | Is the Stock Market Correction Over?

NOVEMBER 13, 2023

There is nothing like an eight-day winning streak to change the market narrative. Stocks have quickly gone from a correction to a comeback this month, and the S&P 500 is now challenging key resistance at 4,400.

Weekly Market Commentary | Can Muni Investors Catch a Break? We Think So

NOVEMBER 6, 2023

It’s been another volatile year for municipal (muni) investors this year. While generally outperforming U.S. Treasuries, the Bloomberg Muni Index is on track for its second calendar year of negative returns—something that has never happened before.