- Stocks up as earnings season kicks off. (10:15am ET) Domestic indexes are advancing in early trading after a string of financial firms, including JP Morgan and Bank of America, released fourth quarter earnings that topped estimates. This follows another session for the S&P 500 (-0.2%) that left the index fighting to rebound from a morning selloff, though it failed to move back into positive territory. In the end, rate-sensitive telecom (0.6%) and utilities (0.1%) logged modest gains as Treasury yields continued to inch lower; financials (-0.7%) led to the downside ahead of this morning’s earnings releases. Overseas, Asian stocks finished mixed; a rebound in the dollar boosted the Nikkei (0.8%), while China’s Shanghai Composite dipped 0.2% after disappointing export data. European markets are higher in afternoon trading with the STOXX 600 up 0.8%. Elsewhere, WTI crude oil ($52.90/barrel) is pulling back after two days of gains, COMEX gold($1191/oz.) is off 0.8%, and 10-year Treasury yields are up 6 basis points (0.06%) to 2.42%.
- Was Friday the 13th lucky for the banks? Certainly banks have been the recipients of some good fortune, surging 31% since the start of the fourth quarter of 2016 compared with just a 5.4% gain for the S&P 500. The group, which unofficially kicks off earnings season today, has benefited from rising interest rates and related steepening of the yield curve, along with prospects for deregulation by the Trump administration. Results for the banks this morning were mostly positive, but on the surface may have slightly missed the market’s lofty expectations. Regardless, strong loan growth, higher trading revenue, and net interest margin trends are positive and we maintain our positive bias toward the sector.
- Chinese trade disappoints. Chinese exports declined in dollar terms (though slightly improved when calculated in yuan), figures generally considered disappointing by financial markets. Weakening exports are signs of slowing global demand, but may also be tied to the yuan, which has strengthened against some of its Asian competitors even as it has weakened against the dollar. Even with these factors, the weakness in exports still has surprised many global economists. Overall, the Chinese trade surplus contracted unexpectedly.
- Fear Triskaidekaphobia? Today is Friday the 13th and it always bring with it talk of how unlucky this day is. We did a fun blog post taking a closer look at whether you should indeed worry. For starters, the S&P 500 hasn’t been up on this day for nearly two years – although there have been only three instances. Nonetheless, we found that since 1928, the average Friday the 13th for the S&P 500 is actually weaker than both the average Friday and average day, but it is higher 57% of the time, better than the average Friday which is higher 54.4% of the time. For an entertaining read, please be sure to see our blog here.
- The tight range continues. The S&P 500 had another nice late-day surge for the second day in a row. It looked like the streak of days without a 1% close lower could be in trouble, but after the afternoon bounce, it is now at 64 consecutive days – the longest streak since 66 in the summer of 2014. The real action, or should we say lack of action, is in the Dow. Over the past month (21 trading sessions), using closing prices, the Dow has traded in a range of only 1.07%. Going back to 1900, that is the tightest monthly range for the Dow ever! What does it mean? Muted periods like now are extremely rare and they don’t last forever. With earnings season heating up next week and the inauguration on Friday, things are ripe for more volatility.
- The breakout no one is mentioning. The British FTSE 100 has broken out to new highs and in the process is up a record 13 days in a row and a record 11 new all-time highs in a row. It has also formed a picture-perfect breakout of a 17-year range. Although this is significant, we haven’t heard many investors mentioning it. Later today on the LPL Research blog we will take a closer look at this important development and what it could mean for European and global equities.
 Please note: The modern design of the S&P 500 stock index was first launched in 1928. Performance back to 1957 incorporates the performance of predecessor index, the S&P 90.
- Japan: Machine Orders (Nov)
- Japan: PPI (Dec)
Past performance is no guarantee of future results.
The economic forecasts set forth in the presentation may not develop as predicted.
The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.
Stock investing involves risk including loss of principal.
A money market investment is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money markets have traditionally sought to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund.
Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.
Treasury Inflation-Protected Securities (TIPS) are subject to interest rate risk and opportunity risk. If interest rates rise, the value of your bond on the secondary market will likely fall. In periods of no or low inflation, other investments, including other Treasury bonds, may perform better.
Bank loans are loans issued by below investment-grade companies for short-term funding purposes with higher yield than short-term debt and involve risk.
Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.
Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments.
Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards.
High-yield/junk bonds are not investment-grade securities, involve substantial risks, and generally should be part of the diversified portfolio of sophisticated investors.
Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rate rise. Interest income may be subject to the alternative minimum tax. Federally tax-free but other state and local taxes may apply.
Investing in real estate/REITs involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained.
Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.
Technical Analysis is a methodology for evaluating securities based on statistics generated by market activity, such as past prices, volume and momentum, and is not intended to be used as the sole mechanism for trading decisions. Technical analysts do not attempt to measure a security’s intrinsic value, but instead use charts and other tools to identify patterns and trends. Technical analysis carries inherent risk, chief amongst which is that past performance is not indicative of future results. Technical Analysis should be used in conjunction with Fundamental Analysis within the decision making process and shall include but not be limited to the following considerations: investment thesis, suitability, expected time horizon, and operational factors, such as trading costs are examples.
This research material has been prepared by LPL Financial LLC.
To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.
Not FDIC/NCUA Insured | Not Bank/Credit Union Guaranteed | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank/Credit Union Deposit
Securities and Advisory services offered through LPL Financial LLC, a Registered Investment Advisor