Market Update: Wednesday, April 26, 2017


  • Markets quiet ahead of tax policy announcement; earnings wave continues. (10:14am ET) U.S. equities are in wait-and-see mode this morning as investors anticipate the Trump administration’s tax policy announcement while keeping an eye on earnings. After two days of firm gains for domestic indexes, markets are easing off the gas after yesterday’s session saw the Nasdaq (+0.7%) breach 6,000, and the S&P (+0.6%) and Dow (+1.1%) again notching solid advances. Materials (+1.6%) and energy (+0.9%) led the advance for the S&P, with defensive sectors utilities (-0.1%) and telecom (-0.3%) the only decliners. Overseas, Asian markets posted further gains as the Nikkei  (+1.1%) extended its longest rally so far this year and the Shanghai Composite (+0.1%) held ground. In Europe, the STOXX 600 (+0.2%) is has climbed into the green after utilities company earnings weighed it down earlier in the session. Meanwhile, interest rates are stable with the yield on the 10-year note at 2.33%, WTI crude oil ($49.14/barrel) is down almost one percent, and COMEX gold (-0.3%) is slightly lower to $1265/oz.


  • Trump’s tax plan just the start of negotiations. As widely reported, the Trump tax plan will be released today at 1:30pm ET today by Treasury Secretary Mnuchin and National Economic Director Gary Cohn. The proposal will reportedly include a 15% corporate tax rate, a 10% rate on repatriated profits, and a 15% maximum rate for pass-through businesses. Notable by its omission will be the border adjustment tax, although something like it is still possible as a revenue raiser to help offset the lost revenue from the tax cuts or to potentially pay for some infrastructure spending. We would view today’s announcement as an opening to negotiations and still expect the final rate to settle between 20-25%, with 25% more likely, and for the horse trading in Congress to delay passage until year-end or into early 2018. That said, the apparent willingness by the administration to potentially add some to the deficit and make the cuts temporary (sunset after 10 years) make a deal more likely. Tax reform could boost S&P 500 corporate profits meaningfully, potentially by 5% or more beginning in 2018.
  • Nasdaq hits 6,000. Yesterday, the Nasdaq closed above 6,000 for the first time in history. Many are wondering if this means it is now in another bubble. There are two important things to consider though, which we will examine in closer detail on the LPL Research blog.



Click Here for our detailed Weekly Economic Calendar


  • Bank of Japan (BOJ) Outlook Report & Monetary Policy Statement
  • BOJ Interest Rate Decision



  • GDP (Q1)
  • UK: GDP (Q1)
  • Eurozone: CPI (Apr)


  • EU Leaders Summit
  • China: Mfg. & Non-Mfg. PMI (Apr)


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.

 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.

 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

Tracking # 1-603066