Market Update: Thursday, March 23, 2017


  • Global equity markets stabilize. (10:10am ET) U.S. stocks are stable this morning after ending mixed on Wednesday; the Dow finished marginally lower to post its fifth consecutive loss. The technology sector (+0.8%) buoyed the S&P 500 (+0.2%) and the Nasdaq (+0.5%), while telecom (-1.0%) and financials (-0.2%) posted losses in the face of Treasury strength across the curve. Overnight, Asian markets recovered after their worst decline in three months, as the Shanghai Composite (+0.1%) and Nikkei (+0.2%) advanced on the backs of financial and industrial stocks. In Europe, equities are slowly gaining ground as the STOXX 600 (+0.3%) attempts to rebound after three down days. Elsewhere, WTI crude oil ($47.72/barrel) is lower again, COMEX gold ($1249/oz.) is near flat after six days of gains, and the yield on the 10-year Treasury is unchanged at 2.40%.


  • Weekly jobless claims tick higher, but labor market remains healthy. Data released this morning on initial claims for unemployment insurance for the week ending March 18 showed an increase of 15,000 from the prior week to 258,000, above consensus expectations. Despite the unexpected rise, claims remained below 300,000, which is generally associated with a healthy labor market. This marks the 80th straight week that weekly data have come in below 300,000, the longest stretch since 1970.
  • Technology asserts its leadership. The S&P 500 technology sector is the top S&P sector performer in 2017 with an 11.7% return, followed next by healthcare at 8.6%. Not only that, but the sector is also the only one above its 2016 relative high vs. the broad S&P 500. Momentum of course does not always portend more momentum, but technology remains one of our favorite sectors due to a solid combination of earnings gains, relatively low valuations, innovation, and potential policy benefits, most notably repatriation of overseas cash at lower tax rates.
  • Time for a correction? Seeing as the last 5% correction for the S&P 500 was right after the Brexit vote in June 2016, could Tuesday’s 1% drop be the start of a normal correction? With financials, small caps, and crude all weakening, this is a question many are pondering. Since 1928[1], this is the eighth-longest streak with the S&P 500 closing within 5% of its all-time high. Simply put, the amount of time since the last normal correction could be one of the largest advocates for a pullback here. Here’s the catch: March and April have been strong over the past 20 years, and when the S&P 500 makes a new high in March (like it did this year), April is higher 75% of the time. We will dig more into this important question today on the LPL Research blog.
    [1] Please note: The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1928 incorporates the performance of predecessor index, the S&P 90.


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  • China: PBOC’s Zhou Speech


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Past performance is no guarantee of future results.

The economic forecasts set forth in the presentation may not develop as predicted.

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